Three things to know before you trade bitcoin futures

Bitcoin, baby, bitcoin!

Bitcoin euphoria can sweep you up, but do you know enough to be prepared to start trading bitcoin futures? These are historic and interesting times for bitcoin as well as the entire cryptocurrency space.

No matter what you think about bitcoin, cryptocurrencies are here to stay. And if you are planning on getting involved in trading bitcoin futures, which are being rolled out by several exchanges, remember to breathe and understand that despite its meteoric rise bitcoin and cryptocurrencies globally are still in the first inning of this game.

Here are three things that are critical to understand before you trade bitcoin:

  1. Are bitcoin futures available on your trading platform? It currently is not available across all of the various trading platforms. But if it's on yours, understand the margin associated with the futures contract. It is a high margin product (nearly 40 percent), as trading platforms as well as clearing firms are very cautious on the product.
  2. Tremendous volatility will be associated with bitcoin futures. Think of trading crude oil on a busy inventory data day; now, multiply that by about 20 or maybe 30.
  3. Bitcoin futures contracts can't be hacked or stolen like coins have and can. They are exchange traded as well as regulated. This is compelling for those looking for long-only exposure to bitcoin versus those simply trading the contract. We are planning on working with clients in 2018 who desire this exposure in their portfolios.

WATCH: How to buy bitcoin futures

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