Let’s say you own 100 BTC and you want to hedge them. You have two options: short sell 100 BTC/USD on an exchange with margin trading, or sell 100 BTC futures. Which is better?

Arguments for Margin

Margin trading has two great properties.

Arguments for Futures

This makes it seem like margin is just better than futures. All the same leverage, but added fungibility and pricing certainty!

Which should you use?

In the end it really depends on your particular situation, and the exchanges involved. Here are the questions we run through to evaluate an exchange when we’re using leverage:

  1. How much interest are we going to be paying on the borrow?
  2. Do we actually need delivery of the other side?
  3. How long will we need to keep the position open for?
  1. Are we paying premium or getting paid premium?
  2. Are we worried about massive liquidity failures and liquidations on the platform?
  3. When do the futures expire?

How does FTX fit into this?

FTX offers two types of products: quarterly futures and perpetual futures.

FTX is a cryptocurrency derivatives exchange built by traders, for traders. Find us at ftx.com, https://t.me/FTX_Official, and https://twitter.com/FTX_Official