Futures Trading FAQ: A Complete Beginner's Guide
With its flexible trading mechanisms and efficient use of capital, crypto futures trading has attracted a growing number of traders. However, Futures trading involves relatively complex concepts and operating procedures, which can make it difficult for beginners to get started quickly. This Futures Trading FAQ answers the most common questions to help you fully understand the core concepts behind Futures trading and start your trading journey with confidence.
1. What Is Crypto Futures Trading?
Futures trading is a form of derivatives trading based on price movements of crypto assets. Unlike Spot trading, users do not need to hold the cryptocurrencies themselves. Instead, they can buy or sell Futures to speculate on market movements, allowing for opportunities to profit whether prices rise or fall. Futures trading is suitable for the following types of users:
- Users with market analysis skills who want to profit from short-term price fluctuations.
- Traders who want to improve capital efficiency through leverage with limited funds.
- Investors who want to seek profits even in declining markets.
2. What are the Core Differences Between Futures Trading and Spot Trading?
The most fundamental difference between Futures trading and Spot trading is whether the underlying asset is actually held. The detailed comparison is as follows:
Difference | Futures Trading | Spot Trading |
Asset holding | No, only price exposure | Yes, actual crypto assets are held |
Profit direction | Supports both long and short positions | Profits only when prices rise |
Leverage | Supports high leverage | Generally not supported |
Suitable users | Short-term traders and hedging users | Long-term holders and DCA strategies |
3. Futures Trading Fees on MEXC
Understanding the fee structure is critical for controlling Futures trading costs. MEXC Futures fees are set as follows:
- Maker: 0%. No fee is charged when placing orders that add liquidity to the order book.
- Taker: 0.02%. This fee applies to market orders or orders that execute immediately.
You can view the latest Futures trading fees on the MEXC Fees page.
4. How Should I Choose Leverage?
MEXC's Futures platform offers flexible leverage settings, ranging from low to high levels. Users can freely adjust leverage based on market conditions and according to their own risk tolerance. Beginners are advised to start with low leverage and gradually increase it after gaining experience. It's always important to recognize that leverage amplifies both profits and risks. For example, using 100 USDT as margin with 10x leverage gives exposure to a 1,000 USDT position. If the market rises by 5%, the profit is 50 USDT, but a 5% decline results in the same amount of loss. Choosing leverage wisely is therefore a key part of risk management.
5. How Do I Open and Close Futures Positions?
The basic steps for Futures trading on MEXC are as follows:
1) Log in to your MEXC account and enter the Futures trading page.
2) Select the trading pair and set the leverage.
3) Choose the margin mode (isolated or cross).
4) Select the order type (limit, market, trigger, etc.).
5) Enter the trade quantity.
6) Choose Open Long or Open Short to open a position.
7) When the price reaches your target, select Close to complete the trade.
For more detailed instructions, you can read:
6. What Is the Funding Rate?
The funding rate is a core mechanism in perpetual futures markets used to keep futures prices aligned with spot prices. The fee is exchanged directly between long and short position holders, and the platform does not charge any portion of it.
- When the funding rate is positive, long position holders pay funding fees to short position holders.
- When the funding rate is negative, short position holders pay funding fees to long position holders.
The funding fee is calculated as: Funding fee = Position value × Funding rate
Note that funding fees may affect the liquidation price and final profit or loss. Funding settlement times vary by trading pair. Refer to the information displayed on the official website for specific settlement times.
7. How Is Futures PNL Calculated?
Futures trading mainly uses two settlement methods: Stablecoin-Margined Futures and Coin-M Futures.
Stablecoin-Margined Futures
- Long position PNL = (Close price − Entry price) × Quantity × Size
- Short position PNL = (Entry price − Close price) × Quantity × Size
Coin-M Futures:
- Long position PNL = (1 / Entry price − 1 / Close price) × Quantity × Size
- Short position PNL = (1 / Close price − 1 / Entry price) × Quantity × Size
8. What Is Liquidation and How Is the Liquidation Price Calculated?
When margin is insufficient to cover losses, the platform triggers liquidation and automatically closes the position to prevent the account from becoming insolvent.
Liquidation condition: Position Margin + Unrealized PNL ≤ Maintenance Margin
Liquidation price calculation:
Long position: Liquidation Price = (Maintenance Margin − Position Margin + Entry price × Quantity × Size) / (Quantity × Size)
Short position: Liquidation price = (Entry price × Quantity × Size − Maintenance Margin + Position Margin) / (Quantity × Size)
Example: A user opens a BTC long position when the BTC price is 60,000 USDT with 50x leverage. If the price falls to 58,000 USDT and margin becomes insufficient, the platform will automatically liquidate the position at the liquidation price to prevent further losses.
For more details, you can read:
9. Why Does the Liquidation Price Change?
Changes in your Futures account balance directly affect the liquidation price.
When users hold both Stablecoin-Margined Futures and Coin-M Futures, funding settlements may cause the liquidation price to rise or fall depending on market conditions.
Under multi-asset margin mode, liquidation prices may change more frequently than under single-asset margin mode. This is because liquidation prices are calculated based on the combined value of all margin assets, and fluctuations in margin prices will cause corresponding adjustments.
10. Why Can't I Increase My Position Size Even With Sufficient Margin?
This is usually related to risk limits. On the Risk Limit page, you can view the maximum position size allowed for each risk tier within the same Futures pair. As position size increases, the maximum allowable leverage decreases. This mechanism is used by the platform to control systemic risk.
Conclusion
Futures trading is a high-risk, high-reward financial tool suitable for users with market judgment and strong risk management awareness. MEXC offers flexible leverage settings, diverse order types, and a transparent fee structure, making it an ideal platform for beginners to learn and practice Futures trading. Before trading, it is recommended to fully understand the rules for trading Futures, develop a reasonable trading strategy, and implement proper risk controls to steadily improve your trading skills.