Futures let you trade the price of an asset, such as an equity or a cryptocurrency, without owning it. You can buy (go long) if you think the price will rise, or sell (go short) if you think it will fall.
This article covers the same topics as the How futures work guide in the app. The examples use simple, illustrative numbers and leave out fees so you can focus on how each concept works. They don't reflect real market conditions.
Futures at a glance
A futures position lets you take a view on where a price is heading. If you go long, you profit when the price rises. If you go short, you profit when the price falls.
- Five-year contracts: you can close your position at any time.
- Margin in EUR, USD or GBP: your profit and loss is settled in USD.
- Leverage: increases both your potential profit and your potential loss.
Contract length: five years
Each futures contract runs for five years, so you can hold a position for as long as you need.
- No rollovers: short-dated futures typically expire every month or quarter. Our contracts last long enough that you don't need to move into a new one.
- Close at any time: you don't have to wait for expiry.
- Tracks the spot price: a funding rate keeps the contract close to the spot price, which is the asset's current market price. See Funding payments below.
Margin and settlement
Margin (also called collateral) is the money that backs your positions.
- Margin: accepted in EUR, USD or GBP. USDC is coming soon.
- Profit and loss: added to or taken from your balance every 60 seconds, in USD.
- Funding: paid between longs and shorts every 4 hours.
Note: prefer to hold EUR or GBP? You can convert your USD balance at any time. Conversions are instant but are not processed on weekends. For details, see What currencies can I use to trade futures?
Going long (buy)
Going long means buying. You might go long if you think the price will rise: your profit increases if the price rises and decreases if it falls.
Example: you buy a $100 position with no leverage.
- If the price rises 10%, you make $10.00.
- If the price falls 10%, you lose $10.00.
Going short (sell)
Going short means selling. You might go short if you think the price will fall: your profit increases if the price falls and decreases if it rises.
Example: you sell a $100 position with no leverage.
- If the price falls 10%, you make $10.00.
- If the price rises 10%, you lose $10.00.
How leverage works
Leverage lets the same margin open a bigger position. Your profit and loss grow by the same multiple.
With $100 of margin and a 5% price move:
| Leverage | Position size | Possible profit | Possible loss |
|---|---|---|---|
| 1× | $100 | +$5 | −$5 |
| 2× | $200 | +$10 | −$10 |
| 5× | $500 | +$25 | −$25 |
| 10× | $1,000 | +$50 | −$50 |
Note: accounts are currently set to 10× leverage. To use less, open positions smaller than 10 times your margin.
Liquidation
Losses are paid from your margin. If a price move uses up all your available margin, your position is closed automatically. This is called liquidation. The higher your leverage, the smaller the price move needed to trigger it.
For a long position, the approximate price fall that uses up all your available margin is:
| Leverage | Price fall |
|---|---|
| 1× | about 100% |
| 2× | about 50% |
| 5× | about 20% |
| 10× | about 10% |
Before closing a position fully, we first try to partially close it to bring your account back to a healthy level.
Note: this example is simplified. In practice, liquidation starts before your available margin reaches zero, and a liquidation fee applies. For the exact calculation, including margin ratio and Derisk Mode, see How do futures liquidations work?
Funding payments
Funding keeps the futures price close to the spot price. Every 4 hours, one side pays the other.
- Futures price above spot: longs pay shorts.
- Futures price below spot: shorts pay longs.
Example: on a $1,000 long position with a funding rate of +0.01%, you pay $0.10. If the rate is −0.01%, you receive $0.10.
Funding is based on your full position size, not your margin, so leverage increases it too. Funding passes directly between traders, and we don't charge a fee on it.
You can see the current funding rate and the countdown to the next payment at the top of every futures market.
Key points before you trade
- Leverage increases potential losses as well as profits. A small price move can have a big effect.
- Positions can be liquidated. Higher leverage brings your liquidation price closer.
- Funding is paid or received between longs and shorts every 4 hours, based on your full position size.
- Everything settles in USD. Profit and loss is added to or taken from your balance every 60 seconds.
- Contracts last five years. You can close your position at any time before expiry.
Open the interactive guide in the app
The app has an interactive version of this guide where you can try different leverage levels yourself.
On the web: open any futures market and select How futures work above the chart, or open it directly from this link.
In the mobile app: go to the More tab and select How futures work, or tap the graduation-cap icon on the futures trading screen.
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If you have any questions, our support team is happy to help.
Investing involves risks. The value of investments can go up as well as down and you may receive back less than your original investment or lose your entire investment. Investing with leverage means the value of your investment fluctuates more than the price of the underlying asset. One Trading does not provide investment advice and investors should make their own decisions or seek independent advice.