Deribit - ETC Futures

Deribit ETC Futures: A Beginner’s Guide

ETC (Ethereum Classic) futures contracts on Deribit offer a unique opportunity for traders to speculate on the price of Ethereum Classic without directly owning the underlying asset. This article will provide a comprehensive introduction to ETC futures on Deribit, covering the basics of futures contracts, the specifics of ETC futures, how to trade them on the platform, risk management, and potential trading strategies. This guide is aimed at beginners, but will also provide useful information for intermediate traders looking to expand their knowledge.

What are Futures Contracts?

At their core, futures contracts are agreements to buy or sell an asset at a predetermined price on a specified future date. Unlike spot trading, where you exchange assets immediately, futures trading involves a contract.

Here’s a breakdown of key terms:

**Underlying Asset:** In this case, Ethereum Classic (ETC).
**Contract Size:** The amount of ETC represented by one futures contract. On Deribit, the ETC futures contract size is 10 ETC.
**Expiration Date:** The date on which the contract must be settled. Deribit lists ETC futures with various expiration dates, typically on a weekly, bi-weekly, or monthly basis.
**Settlement:** The process of fulfilling the contract, usually through cash settlement (more common with crypto futures). This means the difference between the contract price and the spot price at expiration is paid out.
**Margin:** The amount of collateral required to open and maintain a futures position. This is a crucial aspect of leverage and risk management.
**Mark Price:** A calculated price used for margin calculations, based on the spot price and the funding rate. It's designed to prevent manipulation.
**Funding Rate:** A periodic payment between long and short positions, depending on the difference between the futures price and the spot price. This incentivizes the futures price to converge with the spot price.

Futures contracts allow traders to:

**Speculate on Price Movements:** Profit from both rising (going long) and falling (going short) prices.
**Hedge Risk:** Offset potential losses in their spot holdings of ETC.
**Leverage:** Control a larger position with a smaller amount of capital.

Understanding ETC Futures on Deribit

Deribit is a leading cryptocurrency derivatives exchange, known for its robust platform and wide range of options and futures contracts. ETC futures on Deribit are cash-settled, meaning there is no physical delivery of ETC. Instead, the profit or loss is calculated based on the difference between the contract price and the ETC spot price at expiration.

Here’s what makes Deribit ETC futures unique:

**Perpetual and Expiry Contracts:** Deribit offers both perpetual ETC futures (contracts with no expiration date) and expiry contracts (contracts with a specific expiration date). Perpetual contracts are popular for ongoing speculation, while expiry contracts are useful for precise predictions of price at a specific time.
**High Liquidity:** Deribit generally has good liquidity for its ETC futures contracts, making it easier to enter and exit positions without significant slippage. Liquidity is a critical factor in successful trading.
**Advanced Trading Tools:** The platform provides a range of charting tools, order types (including limit orders, market orders, and stop-loss orders), and risk management features.
**Funding Rates (for Perpetual Contracts):** Perpetual contracts utilize a funding rate mechanism to keep the contract price anchored to the underlying spot price. A positive funding rate means longs pay shorts, and vice versa.
**Insurance Fund:** Deribit maintains an insurance fund to cover losses in the event of socialized losses, adding an extra layer of security for traders.

ETC Futures Contract Specifications (Deribit - subject to change)
Feature	Specification	Contract Size	10 ETC	Tick Size	$0.01	Minimum Price Fluctuation	$0.01 per ETC	Leverage	Up to 20x (varies based on risk settings)	Settlement	Cash-Settled	Trading Hours	24/7	Funding Rate (Perpetual)	Every 8 hours

How to Trade ETC Futures on Deribit

Here’s a step-by-step guide to trading ETC futures on Deribit:

1. **Account Creation and Funding:** First, you need to create a Deribit account and complete the necessary KYC (Know Your Customer) verification process. Once verified, you’ll need to deposit funds into your account. Deribit accepts various cryptocurrencies as deposits, including Bitcoin (BTC) and Ethereum (ETH). 2. **Navigate to the ETC Futures Market:** Log in to your Deribit account and navigate to the “Futures” section. Select ETC from the list of available cryptocurrencies. 3. **Choose a Contract:** Select the desired ETC futures contract. Consider the expiration date (for expiry contracts) or the perpetual contract. 4. **Select Order Type:** Choose your order type.

   *   **Market Order:** Executes immediately at the best available price.
   *   **Limit Order:**  Allows you to specify the price at which you want to buy or sell.
   *   **Stop-Loss Order:**  Automatically closes your position when the price reaches a specified level, limiting potential losses.  Stop-loss orders are crucial for risk management.

5. **Enter Order Details:** Specify the quantity (number of contracts) and price (if using a limit order). 6. **Review and Confirm:** Carefully review your order details before confirming. 7. **Monitor Your Position:** Once your order is filled, monitor your position and adjust your risk management settings as needed.

Risk Management for ETC Futures Trading

Trading futures involves significant risk, especially with the use of leverage. Here are essential risk management strategies:

**Position Sizing:** Never risk more than a small percentage of your trading capital on a single trade (e.g., 1-2%).
**Stop-Loss Orders:** Always use stop-loss orders to limit potential losses. Determine appropriate stop-loss levels based on your risk tolerance and the volatility of ETC. Volatility significantly impacts risk.
**Leverage Management:** Use leverage cautiously. While it can amplify profits, it also magnifies losses. Start with lower leverage and gradually increase it as you gain experience.
**Margin Monitoring:** Regularly monitor your margin levels to ensure you have sufficient collateral to cover potential losses. A margin call occurs when your margin falls below a certain level.
**Diversification:** Don’t put all your eggs in one basket. Diversify your portfolio across different cryptocurrencies and asset classes.
**Understand Funding Rates:** For perpetual contracts, be aware of funding rates and how they can impact your profitability.
**Beware of Liquidation:** If your margin falls to zero, your position will be liquidated, and you will lose your entire investment.

Trading Strategies for ETC Futures

Here are a few potential trading strategies for ETC futures on Deribit:

**Trend Following:** Identify the prevailing trend in ETC and take long positions in an uptrend and short positions

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