Deribit cryptocurrency derivatives
Deribit crypto derivatives trading platform has been operating since 2016. The exchange is headquartered in the Netherlands. The platform was founded by John Jansen, Andrey Yanovsky, Sebastian Smychinsky and Marius Jansen.
Deribit derivatives trading platform allows you to trade Bitcoin and Ethereum futures and options. Account replenishment, transactions and withdrawals are made in bitcoins. That is, in order to replenish the deposit, you will first need to buy bitcoins.
Although Deribit cryptocurrency derivatives trading platform is not the most famous exchange yet, its popularity is constantly growing. Residents of more than 100 countries use the services of the exchange.
Deribit trading platform
The platform seems to be very functional, but at the same time intuitive.
The menu with all trading options, FAQs and other important items is on the left sidebar. The Deribit.com website and exchange platform have been translated into a number of different languages. There are also many features available regarding account management. For example, you can create multiple additional sub-accounts, set up cross-margin between accounts, and get a full report on your trading statistics.
There is extensive documentation and educational content to help new users get started with Deribit cryptocurrency derivatives trading. This also includes reviews of their trading instruments, as well as general information about the exchange itself. There are also helpful videos that explain the whole process in an accessible way.
If you have traded futures on other exchanges, then this futures exchange will be familiar territory to you.
Markets may change depending on the expiration date of the futures contract. You can also decide whether to open a position - long or short, that is, "buy" or "sell" the contract.
Deribit derivatives trading also has so-called “perpetual futures”.
In fact, these are just contracts that do not have an expiration date. You can think of them as trailing futures contracts, which are equivalent to derivatives such as CFDs (Contracts for Differences) and spread betting.
Order lists, recent trades, and order placement forms are all in one place. Just below you will find your current orders and current trades.
Tradingview charting and analysis technology is integrated into the Deribit platform. This is convenient for using cryptocurrency technical analysis. Deribit has a number of options related to placing and maintaining trades.
By going to the options exchange, you will see all available option markets. Probably, at first glance, for an uninitiated trader, this may seem difficult. You will be presented with different types of options with different expiration dates and strikes. In addition, users are shown other important data such as volatility, delta, open interest, etc.
You can track the dynamics of your options portfolio at the top of the screen. Below you can narrow down the choices provided by using specific filters. This is done using parameters such as price, open interest or even Greeks. What are the Greeks? Options have options such as delta, theta, gamma, and more. If you want to open a position on a particular option, you can use two methods to narrow down your choices to the one you want. You need to either refine your search criteria in the upper right corner or select an option in a specific order placement form. Clicking on a specific option in the Market Watch will open the form for placing an order for that option.
Forms for placing orders
For Deribit crypto derivatives trading, there is a fairly wide range of order options for both futures and options. This will help you improve your trading strategy. Four types of orders are available for futures instruments:
Limit. This is an order that is placed at a pre-set price. It ceases to be valid only after manual enforcement or removal. Market. These orders are placed in such a way that their execution occurs immediately. That is, the transaction takes place at the price of demand when selling and offer when buying.
Stop market. This is a market order with which a stop loss is immediately set. It is executed at the market price and you will have a stop loss to protect against losses. Stop limit. Almost the same as a stop market, but it uses a limit order with a stop.
Leverage and insurance fund
On the Deribit exchange, the leverage is up to 1:10, for futures, a loan of up to x100 is possible.
It is worth mentioning the Deribit insurance fund. The insurance fund is essentially a stock of BTC that is held in reserve in case traders go bankrupt. It is funded by fees charged by Deribit for liquidation orders. Then they are added to the insurance fund every hour.
As long as the amount of BTC in the fund is greater than zero, traders can withdraw unrealized profits on futures contracts. If the insurance fund somehow runs out, the remaining traders will be trapped, and the debts of the bankrupt traders will be “socialized” among the profitable traders. You can think of this insurance fund as something like a collective risk reduction fund.
What is spot trading and derivatives?
The spot market is a market where you can buy or sell cryptocurrency instantly. Cryptocurrency, like securities and currencies, is a financial instrument.
A little more difficult with derivatives. Therefore, this type of trading is more suitable for professional traders who understand the movements of the market, and are also able to conduct high-quality technical analysis.
The main difference between this market and the spot market is that there are not orders here, but contracts; they are completed within the stipulated time.
This is a very important point, because cryptocurrency rates are constantly changing (literally every minute).
To carry out such transactions, one does not need to directly possess bitcoin or another coin. A derivative is a contract in which a trader assumes what the price of a coin will be and acts on that assumption without necessarily owning the coin.
The price of a derivative (future, option, swap, contract for difference, aka CFD) is determined by the price of the underlying asset (in our case, cryptocurrencies).
There are several functions of derivatives for a crypto investor:
- The first is to reduce the risk of losing on falling prices.
For example: a trader may be afraid that the coin will fall in price by the end of the week. To secure his investments, he can enter into an agreement with trader 2 to sell his coins (in whole or in part) to him when the value of BTC drops to a certain value.
- The second function is directly earnings.
Speaking of derivatives, you need to remember that here traders are guided by prices that do not yet exist, that is, they are estimated. Cryptocurrency trading is always a big risk, and even more so on such instruments.
Derivatives can be traded with leverage!
Here, a prerequisite is to provide a guarantee to the crypto-exchange, that is, to deposit funds to your exchange wallet. A number of platforms provide this service. As a rule, the loan amount is proportional to the amount of funds deposited. However, when choosing where to buy coins with leverage, it is better to stop at sites where it is x5, x10. You can trade Deribit cryptocurrency derivatives in India with x10 leverage.
Futures: A trader enters into a futures contract to sell/buy an asset at a specific price on a specific day. With regard to futures, it is important to remember the terms "long" and "short" - these are positions. The buyer is always long, the seller always short.
For futures, you can either receive the asset directly (for example, when you trade with leverage - this is the actual delivery of the underlying asset), or the price difference at the end of the contract (this is called cash settlement).
Options are a freer tool because, unlike the above, they do not have to be exercised.
How to buy cryptocurrency on an option: if you want to buy an option, you create a call (call option). Thus, you get the right to purchase the underlying asset (cryptocurrency) at a set price. Sell an option - put a put (put option). Set the right to sell at a specific price. These terms are replacements for short and long positions.
Under the terms of the option, the trader receives the right to exercise at the agreed price on the days specified in the contract.
Important: if you let the option expire, the price you paid for it (premium) is not refundable.
Swaps are derivatives that are considered complex futures. The difference is that it does not have a final expiration date or set dates for settlements on it. For this reason, it is also called "perpetual contract". In fact, a swap is two contracts at once: for the purchase and sale of the underlying asset, as well as for the purchase and sale of it in the future.
CFD (contract for difference) is a way to buy cryptocurrency on the difference in the value of the underlying asset, which is formed in the interval between opening / closing a position. You do not need to have an asset here, the task is to correctly predict the price movement. As a rule, this is trading with leverage.
How to trade?
It is very easy to start trading Deribit derivatives in India. There is a tutorial on the platform. You can watch videos for detailed instructions.
In October 2021, the exchange received a UI update with some useful new features and improvements.
When you go to deribit.com and log in, you will be taken to the main trading page.
All menu items are now at the top of the page. Clicking on the three lines icon in the top left will display links to many of the pages available on the website, including the block trading page and the exchange page
To navigate to the trading pages, hover your mouse over the desired currency at the top, and a drop-down menu will appear containing each of the available futures contracts, as well as a link to go to the options trading page.
One of the biggest improvements in the new user interface is the ability to customize the size and position of all modules, and there are also some brand new modules. You can resize modules and drag them.
Because the new layout is extremely customizable, you can now customize your Deribit screen to suit your needs.
If you like a minimalist screen with few distractions, you can remove any modules you don't need. If you'd rather have all the information you need at your fingertips, you can add whatever you want to the layout, including some new modules like a depth chart and an option order form.
We wish you good luck trading Deribit crypto derivatives in India . Get started and you'll be fine!