Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific
provider, service or offering. It is not a recommendation to trade.
What is KuCoin Futures?
KuCoin Futures is an advanced cryptocurrency trading option that is part of the wider KuCoin cryptocurrency exchange.
Futures contracts are a type of derivative product that allow 2 users to enter into a contract for the purchase and sale of a digital asset at a predetermined date and price. They offer a few distinct advantages to traders. Traders can place positions that are significantly higher than existing holdings, trade both upwards and downwards market movements, and de-risk existing cryptocurrency positions.
Unlike trading on spot markets, trading futures contracts enables users to trade both long and short positions. There is no direct purchase of an underlying asset, which makes short selling much easier.
Traders are also able to leverage funds to increase position size. This is more formally known as trading with margin. It offers traders the opportunity for larger rewards, but equally increases the risk of larger losses.
KuCoin hosts 3 futures platforms. These are Futures Lite, Futures Pro and Futures Brawl. Across the 3 KuCoin Futures platforms, 4 types of futures products are offered: inverse, linear, perpetual and delivery contracts.
What can I trade on KuCoin Futures?
KuCoin Futures supports over 100 different cryptocurrencies including:
Note: While offering a larger number of cryptocurrencies, not all cryptocurrencies that are available on the KuCoin spot exchange can be traded on the KuCoin futures exchange.
Types of contracts
There are 4 types of futures contracts currently available on KuCoin. These include delivery contracts, perpetual contracts, inverse contracts and linear contracts.
Delivery contracts are a type of futures contract that are used in traditional financial investing. Delivery futures trading contracts have to be settled at a particular date, known as the delivery date, where the buyer is obliged to purchase and receive the asset at a predetermined price. The seller, on the other hand, is obliged to provide and deliver the asset on the delivery date. On KuCoin, these are offered as quarterly contracts on assets such as BTC and ETH.
Unlike delivery contracts, perpetual contracts are futures contracts that have an indefinite settlement time. This means that the user can "perpetually" hold the contract position for as long as they want. There are more than 60 perpetual contract products to choose from on KuCoin.
Inverse contracts are coin-margined contracts and are denoted by the "Coin-M" heading. To execute an inverse contract, the trader must hold the exact cryptocurrency they wish to trade. You can trade futures on BTC, ETH, DOT and XRP through this option.
For example, if you want to trade an inverse contract on BTC, the underlying asset must be BTC as well. This works exactly the same for other coin-margined contracts.
Linear contracts are USDT-margined contracts and are identified on the KuCoin platform via the USDT-M option. The underlying token for trades is USDT. Due to the stability of USDT, there are more cryptocurrencies to trade using this contract type. Funds held as USDT is all you need to participate.
Below we have included a comparison table to help illustrate the differences between perpetual and delivery contracts.
|Contracts||BTC PERP/USDT||BTC Quarterly 0924|
|Expiry Date||Perpetual||2021/09/24 08:00:00 (UTC)|
|Funding Rate and Settlement Fee||Funding rate depends on contract||Funding rate set at 0.025%|
KuCoin Futures features
KuCoin Futures is composed of 3 different platforms. These are KuCoin Futures Lite, KuCoin Futures Pro and KuCoin Futures Brawl.
KuCoin Futures Lite
KuCoin Futures Lite version is a simplified version of the Futures platform that aims to make the experience of contract trading easier and more enjoyable. It achieves this by removing certain aspects of the user interface, which minimises the complexity of entering positions.
Users are still able to choose between USDT-margined or BTC-margined futures contracts on the Lite version and are still able to access just as many cryptocurrency pairings. The layout of the Lite screen is only composed of market data, contract data and trading operation interface.
KuCoin Futures Pro
KuCoin Futures Pro adds to the features that are already available with the Lite version. The platform offers a more comprehensive package for those experienced with futures contracts.
Again, users can choose between USDT-margined and BTC-margined futures contracts. However, the layout in Futures Pro consists of a detailed contracts tab, a trade operation box, more detailed market data – including an order book – and an area to see open positions.
KuCoin Futures Brawl
KuCoin Futures Brawl allows traders to compete against each other when trading futures contracts for the chance to win a percentage of an ever-changing prize pool. The platform gamifies the futures trading activity and aims to turn it into a fun activity.
A user must register to participate in a brawl event before any trading points are counted.
All Kucoin Futures platforms offer leveraged trading. This means that a user can borrow money from the platform to increase the position size of a trade. Leverage can be set between 1x and 20x on regular assets. It can also be increased to 100x for popular coins such as BTC and ETH.
Profits and losses are all calculated in either BTC, ETH or USDT. A user can exit a futures trade at any time by closing the long or short position. Along with the benefit of increased position size, leveraging also allows users to hold multiple positions on different cryptocurrencies simultaneously.
How do I create an account?
Registration on KuCoin is simple as it only requires a working email address or mobile phone number.
Step 1. Register with an email address or phone number
Visit the official KuCoin website or mobile applications and click the "Sign Up" button. You will be asked to provide an email address. Make sure that the email you input is working since a verification code will be sent there.
Step 2. Log in to your account
There are 2 ways to log in to your account: either through the password you've set or a QR code. Once you're in, you can start trading your KuCoin Futures trading journey.
Remember, never share your account details with anyone.
Steps to trading on KuCoin Futures
You can trade futures on KuCoin either via the mobile or web applications.
Step 1. Enable Futures trading
The first step is to go to the "Futures" tab on the mobile application. Alternatively, on desktop, click the Kucoin Futures tab. Choose which version of the Futures platform you wish to use: Lite, Pro or Brawl.
If you haven't already, click "Enable Futures Trading" to use the futures platform.
Step 2. Transfer funds to your Futures account
You need to supply funds to your Futures account before you can begin. On the mobile app, go to the Assets tab and click "Transfer". Transfer funds from your Main KuCoin account to your Futures account. If you don't have any balance on your Main account, you can opt to deposit funds directly into your Futures account instead.
Note that the token requirements vary between USDT-margined and Coin-margined contracts.
Once funds are deposited, you are now ready to start choosing which cryptocurrency pairing to trade.
Step 3. Start trading
After you've chosen a cryptocurrency pairing, you can choose to either "Buy" or "Sell". Buying is equivalent to taking a long position, in which you profit once the price of a token increases. On the other hand, selling involves taking a short position where you profit once the price of an asset drops.
As mentioned previously, KuCoin gives you the freedom to choose the leverage you want. This ranges from 1x to 20x (100x limit for BTC and other Perpetuals). Remember, higher leverage also means increased liquidation risk if the trade goes against you.
Liquidation happens when you fail to hold a percentage of the value of your position, also called the maintenance percentage. This is calculated based on your average entry price and leverage.
If the marked price reaches this threshold, your position will be liquidated and you will lose all the funds used as margin in your futures trade.
What are the fees and how do they work?
KuCoin Futures trading fees
There are always 2 parties involved in a trade: makers and takers. Makers are those who have created a new order on the platform and, therefore, have created liquidity. Meanwhile, takers accept already existing orders and, therefore, remove liquidity. As a result, makers are often rewarded with slightly lower transaction fees.
The trading fees for KuCoin Futures trading are outlined below:
KuCoin Futures withdrawal fees
The withdrawal fee for BTC amounts to 0.0005 BTC, which is about 40% lower than the industry average of 0.000812 BTC.
Cryptocurrencies are arguably the most volatile asset class in the world. Even some of the most popular coins can still fluctuate between 20–100% in one day. While leverage can potentially amplify your rewards for well-positioned trades, it also has a chance of draining your account if a trade doesn't go according to plan. Futures trades have a liquidation threshold, unlike spot trading.
As with any platform, the systems used to support the traders are vulnerable to system disruptions or failure, especially during high-volume trading periods. If the platform shuts down or is non-operational, it may lead to significant losses. Any malfunctions may mean you can't monitor positions or make necessary adjustments to prevent losses.
With the rise of DeFi, many hackers have shifted their focus to decentralised exchanges and protocols with untested smart contract vulnerabilities. However, this doesn't mean that centralised platforms, like KuCoin, are not targeted too.
If the exchange gets hacked, there is a possibility of losing holdings if KuCoin's insurance funds cannot provide enough coverage for those affected. For KuCoin, it wouldn't be without precedent: In 2020 cybercriminals stole over $275 million from Kucoin in a brazen hack. Luckily, all funds were reimbursed.
Another possibility is that a hacker targets your account and steals funds after gaining access to your login credentials – potentially through a phishing attack. To avoid this, never share any sensitive details pertaining to your account with anyone, and don't click on suspicious links in emails, messages or ads.
Pros and cons
- KuCoin offers some of the lowest fees for futures trading currently available in the cryptocurrency market.
- The exchange supports futures contracts for a wide array of coins.
- Futures contracts allow traders to increase exposure without large funds.
- Although offering the ability to increase position size, futures contracts also increase liquidation risk.
- System failures increase the probability of significant losses when compared to spot trading.
KuCoin is a solid platform for futures trading, thanks to its user-friendly interface and its generous selection of supported assets. The exchange also charges cheaper transaction and withdrawal fees compared to many other competitors. However, remember that losses can be amplified when trading leveraged futures contracts, regardless of the platform being used. Also be aware that due to intense regulatory pressure, many exchanges are now either greatly curtailing or ceasing futures trading services to avoid possible enforcement actions.
Only trade futures when you have a strong hypothesis that the market will move in your favour. Even then, only invest a tiny percentage of your portfolio.
If you're a beginner, we recommend using spot exchange markets. It offers a more straightforward approach to trading and is a much less risky method of gaining exposure to the cryptocurrency markets.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly
volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of
future performance. Consider your own circumstances, and obtain your own advice, before relying on this information.
You should also verify the nature of any product or service (including its legal status and relevant regulatory
requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may
have holdings in the cryptocurrencies discussed.