What are futures?

A future lets you profit if a price goes up (long) or if it goes down (short), without buying the asset. In Bomba, futures are perpetual futures on crypto, stocks and commodities, on decentralized exchanges.

Traditional futures and perpetual futures

A traditional future is a contract to buy or sell something at a price set today, on a future date. In Mexico, for example, they’re listed on the Mexican Derivatives Exchange (MexDer).

A perpetual future has no expiration date: you can keep the position open as long as you want. To keep its price from drifting away from the asset’s real price, there’s the funding rate, covered below.

Long and short

• Long: you gain if the price goes up and lose if it goes down.
• Short: you gain if the price goes down and lose if it goes up.

An example without leverage: you open a $1,000 long on bitcoin. If bitcoin rises 5%, you gain $50; if it falls 5%, you lose $50. A short works the other way around.

Margin and leverage

Margin is the money backing your position. Leverage lets you open a position larger than your margin: with $100 of margin at 5×, your position is $500. Gains and losses are calculated on the $500, so a 2% move in the price is 10% of your margin, for or against you.

Liquidation

If losses eat through your margin, the position closes on its own: that’s liquidation, and you lose that position’s margin. The more leverage, the closer your liquidation price. At 10×, a move of less than 10% against you can be enough.

Funding rate

Every so often (on many exchanges, every hour), longs and shorts pay each other a small amount. If the future’s price is above the asset’s real price, longs pay shorts; if it’s below, it’s the other way around. That keeps the future’s price tied to the asset’s. If you hold a position for many days, funding adds up.

Order types

• Market: at the best price available at that moment.
• Limit: only at your price or a better one; if the price doesn’t get there, the order waits.
• Take profit: closes the position when the price reaches your target.
• Stop loss: closes the position if the price reaches a level against you, to limit the loss.

Futures in Bomba

Bomba has more than 300 futures on crypto, stocks and commodities, sorted by 24-hour volume. You go long or short, with limit orders, take profit and stop loss, on decentralized exchanges. Futures are different from prediction markets: a future tracks a price; a prediction market answers a yes-or-no question.

The risks, plainly

• You can lose a position’s entire margin, and with high leverage it can happen fast.
• Funding costs money when it’s your turn to pay it.
• Crypto markets never close: the price moves even while you sleep. A stop loss helps.
• Start small and with low leverage until you understand how your position moves.