Wondering How To Buy Futures? Check Out This Quick Guide 1

Wondering How To Buy Futures? Check Out This Quick Guide

Digitex Futures
Trading
• Christina Comben
September 2, 2019

As we announced the launch of our public testnet and inch closer to opening the gates, things are starting to get real at last! You may find yourself wondering how to buy futures or indeed, what futures really are. In this article, we explain the basic concepts, how to buy futures, the types of contracts, and all you need to know to get into stock futures investing.

About Futures 

For a more in-depth overview of futures and futures trading, check out our how-to guide here. However, the basic premise is this: Think of futures contracts as agreements between two parties to trade an asset (in this case Bitcoin) for an agreed-upon price in the future. 
Trading futures has many benefits and started out as a way of allowing large companies, farmers, oil producers, etc. to hedge their commodities’ value against price fluctuations. Say an oil producer believes that the price per barrel will drop significantly in the next six months. He can enter a futures contract to sell at today’s price in six months to secure his profit. Of course, he loses out if the price rises. Trading futures is always a gamble, even more so in the cryptocurrency space.
There are many different types of futures contracts, including physically settled and cash-settled, as well as daily and monthly settled and perpetual swaps. Until Bakkt makes its entrance in September of this year with the first physically settled Bitcoin Futures market, all futures in the crypto space are cash-settled. This means that the traders pay each other the difference instead of physically delivering the underlying asset (Bitcoin). 
While some traders are looking to hedge on price, most modern futures traders are speculators looking to trade on price fluctuations and make cash profits, rather than taking custody of the underlying asset (i.e. barrels of oil, bars of gold, or even bitcoins). This would be a physically-settled contract and is more applicable to institutional space, agricultural or airline industries, for example. 

Perpetual Swaps

What are perpetual swap contracts? Perpetual swaps have no expiration date, unlike daily or monthly settled futures contracts. This makes them easier to understand for retail traders and they will be the main focus of the Digitex Futures exchange. As Adam stated in the AMA about the testnet:
“With a futures contract that may not expire for another month, there’s a premium because the spot price is further away from the contract price. Also, at settlement, there’s a need to settle the old contract and then open a new contract. Perpetual swap futures are the way forward for attracting retail traders and therefore, ensuring volume.”

Futures Markets

The futures market globally is now enormous and growing all the time according to the Futures Industry Association, with futures traded against stocks, Forex, cryptocurrencies, indices, bonds, gold, and more.
If you were asking questions like, what are stock futures, what is day trading futures, and how to buy futures, it helps to have an overview of the different types of markets first–as well as the tools that good futures traders use to magnify their profits.
You can buy futures contracts through a traditional broker or online from an abundance of sites that make trading simpler and easier, cut out intermediaries and lower costs. On the Digitex Futures exchange, you’ll be able to buy cryptocurrency futures with zero commissions on all trades–a first for both the crypto and the futures industry.
Futures traders often use tools like margin and leverage to increase their profit sizes. Borrowing funds from an exchange to take a bigger position can be risky and highly leveraged traders can get blown out in volatile markets. However, leverage does give skilled traders the chance to make a lot of money fast and greatly magnify their winnings. This is why 100x leverage has become so popular in the cryptocurrency markets.

How to Buy Futures on the Digitex Exchange

On the Digitex exchange, you can buy futures using DGTX only. This means that you’ll need to know where to buy ether, first of all, to purchase DGTX and then all your profits and losses will be denominated in DGTX.
As Adam highlighted in his AMA, you will be buying a perpetual swap contract, which will be a dollar’s worth of DGTX tokens and has no expiration date. We are still finalizing the futures contract specifications, however, they will be essentially the same as other major futures exchanges such as BitMEX and Bybit to make it easier for their traders to switch over to Digitex. We want to make it as simple as possible to create winning traders and to allow them to trade successfully. 
Skilled traders are used to trading futures for profit. It takes time and discipline, but even you’re just starting out, earning some extra income from day trading futures is certainly within your reach, especially on a platform that charges no commissions and has no mechanical edge working against you.

September 2, 2019
Digitex Futures
Trading

Wondering How To Buy Futures? Check Out This Quick Guide

Christina Comben
Wondering How To Buy Futures? Check Out This Quick Guide 2

As we announced the launch of our public testnet and inch closer to opening the gates, things are starting to get real at last! You may find yourself wondering how to buy futures or indeed, what futures really are. In this article, we explain the basic concepts, how to buy futures, the types of contracts, and all you need to know to get into stock futures investing.

About Futures 

For a more in-depth overview of futures and futures trading, check out our how-to guide here. However, the basic premise is this: Think of futures contracts as agreements between two parties to trade an asset (in this case Bitcoin) for an agreed-upon price in the future. 
Trading futures has many benefits and started out as a way of allowing large companies, farmers, oil producers, etc. to hedge their commodities’ value against price fluctuations. Say an oil producer believes that the price per barrel will drop significantly in the next six months. He can enter a futures contract to sell at today’s price in six months to secure his profit. Of course, he loses out if the price rises. Trading futures is always a gamble, even more so in the cryptocurrency space.
There are many different types of futures contracts, including physically settled and cash-settled, as well as daily and monthly settled and perpetual swaps. Until Bakkt makes its entrance in September of this year with the first physically settled Bitcoin Futures market, all futures in the crypto space are cash-settled. This means that the traders pay each other the difference instead of physically delivering the underlying asset (Bitcoin). 
While some traders are looking to hedge on price, most modern futures traders are speculators looking to trade on price fluctuations and make cash profits, rather than taking custody of the underlying asset (i.e. barrels of oil, bars of gold, or even bitcoins). This would be a physically-settled contract and is more applicable to institutional space, agricultural or airline industries, for example. 

Perpetual Swaps

What are perpetual swap contracts? Perpetual swaps have no expiration date, unlike daily or monthly settled futures contracts. This makes them easier to understand for retail traders and they will be the main focus of the Digitex Futures exchange. As Adam stated in the AMA about the testnet:
“With a futures contract that may not expire for another month, there’s a premium because the spot price is further away from the contract price. Also, at settlement, there’s a need to settle the old contract and then open a new contract. Perpetual swap futures are the way forward for attracting retail traders and therefore, ensuring volume.”

Futures Markets

The futures market globally is now enormous and growing all the time according to the Futures Industry Association, with futures traded against stocks, Forex, cryptocurrencies, indices, bonds, gold, and more.
If you were asking questions like, what are stock futures, what is day trading futures, and how to buy futures, it helps to have an overview of the different types of markets first–as well as the tools that good futures traders use to magnify their profits.
You can buy futures contracts through a traditional broker or online from an abundance of sites that make trading simpler and easier, cut out intermediaries and lower costs. On the Digitex Futures exchange, you’ll be able to buy cryptocurrency futures with zero commissions on all trades–a first for both the crypto and the futures industry.
Futures traders often use tools like margin and leverage to increase their profit sizes. Borrowing funds from an exchange to take a bigger position can be risky and highly leveraged traders can get blown out in volatile markets. However, leverage does give skilled traders the chance to make a lot of money fast and greatly magnify their winnings. This is why 100x leverage has become so popular in the cryptocurrency markets.

How to Buy Futures on the Digitex Exchange

On the Digitex exchange, you can buy futures using DGTX only. This means that you’ll need to know where to buy ether, first of all, to purchase DGTX and then all your profits and losses will be denominated in DGTX.
As Adam highlighted in his AMA, you will be buying a perpetual swap contract, which will be a dollar’s worth of DGTX tokens and has no expiration date. We are still finalizing the futures contract specifications, however, they will be essentially the same as other major futures exchanges such as BitMEX and Bybit to make it easier for their traders to switch over to Digitex. We want to make it as simple as possible to create winning traders and to allow them to trade successfully. 
Skilled traders are used to trading futures for profit. It takes time and discipline, but even you’re just starting out, earning some extra income from day trading futures is certainly within your reach, especially on a platform that charges no commissions and has no mechanical edge working against you.

Latest News

Digitex Futures Proposes the Idea of Token Burning to the Community 3

Digitex Futures Proposes the Idea of Token Burning to the Community

Digitex Futures
Trading
• admin
June 24, 2019

In this latest post and video, CEO Adam Todd outlines a proposal for introducing token burning into the tokenomics of the Digitex (DGTX) token. This is currently just a proposal and whether or not it is implemented will depend on the response from the community. We will post an article later this week that contains more details about how such proposals will be submitted and voted on when Digitex becomes a DAO. Below are the mechanics of how the proposed system would work.

The Concept:

The Liquidation Engine of the Digitex Futures exchange penalizes highly leveraged traders that allow their account balance to drop below the required Maintenance Margin amount needed to maintain their open position, thus forcing the exchange to take over their position and liquidate it. When force liquidating a position the exchange stops out the trader at his bankruptcy price as if he lost his entire Initial Margin but it is probable that the exchange gets a better price. All additional funds made when the exchange gets a better price are deposited into an Insurance Fund. The entire balance of the Insurance Fund is burned every night at midnight UTC.

The Mechanics:

  1. Traders on the Digitex Futures exchange must have sufficient Initial Margin in their trading account to open a futures position.
  2. After opening a futures position, a trader must have sufficient Maintenance Margin in their trading account to keep that position open.
  3. Initial Margin is calculated as: Contract Value divided by Leverage Rate.
  4. Maintenance Margin is calculated as 50% of Initial Margin.
  5. If the trader’s account balance falls below the Maintenance Margin requirement to maintain the current open position, the system will cancel the unmatched orders on that market to free up the margin requirements of those unmatched orders. If after doing this,  the account balance is still below the required Maintenance Margin, the system will take over the trader’s position and liquidate it.
  6. The Liquidation Engine takes over positions from traders whose account balance has fallen below the minimum required Maintenance Margin amount to maintain their open position on a futures market.
  7. After assuming a trader’s open futures position, the system will attempt to immediately close that position by submitting a buy or sell order at the bankruptcy price.
  8. The bankruptcy price is the price at which the trader will lose his entire Initial Margin amount that he posted to open the position.
  9. For Long positions, the bankruptcy price is calculated by subtracting the Initial Margin requirement from the trader’s entry price. For Short positions, the bankruptcy price is calculated by adding the Initial Margin requirement to the trader’s entry price.
  10. After assuming a trader’s position, if the system is able to liquidate that position at a better price than bankruptcy price, the additional funds are placed into the Insurance Fund.
  11. Example trade: Bob places a limit order to buy 1 BTC/USD futures contract at 10,000 at 100x leverage which requires Initial Margin of 100 DGTX. He has exactly 100 DGTX in his trading account and shortly after placing it, his buy order is filled. His Maintenance Margin requirement is therefore 50 DGTX, which means his account balance must have at least 50 DGTX in it to maintain this open Long position. If the price drops to 9,950 his account balance falls to 50 DGTX and the system will take over his position and will submit a sell order at the bankruptcy price of 9,900 (Entry Price – Initial Margin).
  12. In the above example, if the system submits a sell order at 9,900 when the last traded price is currently 9,950, it is probable that the position will be closed at a better price than 9,900. If the position is liquidated at 9,940, then 40 DGTX will be added to the Insurance Fund.
  13. This effectively means that traders who allow their position to be force liquidated by the exchange by allowing their account balance to go below the required Maintenance Margin level will always lose the full Initial Margin amount they posted to open that position, even if the position is closed at a better price than bankruptcy price. Any additional funds that are made by getting a better price than bankruptcy price are added to the Insurance Fund and not to the trader’s account. This will incentivize traders to avoid forced liquidations which are a risk vector for the exchange.
  14. This liquidation system is very similar to how BitMEX takes over and liquidates bankrupt traders’ positions. Note here how consistently their Insurance Fund balance increases with virtually no daily drawdowns of any significance over a period of years, even during periods of high volatility.
  15. The BitMEX Insurance Fund balance has increased 99 days out of the last 100 days and this is typical performance going back for years.
  16. If the Insurance Fund of the Digitex Futures exchange performed in approximately the same way as BitMEX’s Insurance Fund then we would have burned tokens 99 days out of the last 100 days.
  17. Instead of building up a huge Insurance Fund that may never be needed, Digitex can transfer that value to other Digitex (DGTX) token owners whilst still having the safeguard of an Insurance Fund.
  18. All account balances are denominated in Digitex (DGTX) tokens and all trading profits and losses are in Digitex (DGTX) tokens. Therefore, the Insurance Fund balance is denominated in Digitex (DGTX) tokens.
  19. The entire balance of the Insurance Fund will be burned every day at midnight UTC.
  20. This means the Insurance Fund will always be empty, but it has the power to issue new tokens to cover its liabilities. It is highly likely that the number of new tokens that must be occasionally issued to cover losses will be significantly less than the number of tokens that are burned every day.
  21. The token burning process will be fully verifiable and the corresponding number of Digitex (DGTX) tokens that are destroyed will be subtracted from the available supply as displayed on etherscan.io.
  22. In the event of system losses during periods of high volatility when the exchange is unable to liquidate assumed futures positions without suffering losses, the Insurance Fund can issue new Digitex (DGTX) tokens to cover those losses. This process will be fully verifiable and any new tokens issued will be visible on etherscan.io.
  23. The Insurance Fund will have its own page on the exchange where all token burning and token issuance activity and history can be clearly seen and verified on etherscan.io.
  24. Possible variations of this system that can be voted on by the DAO are whether we burn tokens on a weekly, monthly or quarterly schedule instead of daily. Also, the DAO can decide on whether to burn all tokens in the Insurance Fund or whether to keep a certain minimum balance to avoid the need for token issuance after one losing day.

We encourage you all to share your feedback on Telegram and/or Twitter, and we will collect all your questions throughout the week. This Friday, 28th June at 3 pm UTC, Adam will host another live AMA to further discuss the Digitex token burning proposal. Again, whether or not this will be implemented depends on the response from the community. We encourage you all to participate in sharing your feedback!

June 24, 2019
Digitex Futures
Trading

Digitex Futures Proposes the Idea of Token Burning to the Community

admin
Digitex Futures Proposes the Idea of Token Burning to the Community 4

In this latest post and video, CEO Adam Todd outlines a proposal for introducing token burning into the tokenomics of the Digitex (DGTX) token. This is currently just a proposal and whether or not it is implemented will depend on the response from the community. We will post an article later this week that contains more details about how such proposals will be submitted and voted on when Digitex becomes a DAO. Below are the mechanics of how the proposed system would work.

The Concept:

The Liquidation Engine of the Digitex Futures exchange penalizes highly leveraged traders that allow their account balance to drop below the required Maintenance Margin amount needed to maintain their open position, thus forcing the exchange to take over their position and liquidate it. When force liquidating a position the exchange stops out the trader at his bankruptcy price as if he lost his entire Initial Margin but it is probable that the exchange gets a better price. All additional funds made when the exchange gets a better price are deposited into an Insurance Fund. The entire balance of the Insurance Fund is burned every night at midnight UTC.

The Mechanics:

  1. Traders on the Digitex Futures exchange must have sufficient Initial Margin in their trading account to open a futures position.
  2. After opening a futures position, a trader must have sufficient Maintenance Margin in their trading account to keep that position open.
  3. Initial Margin is calculated as: Contract Value divided by Leverage Rate.
  4. Maintenance Margin is calculated as 50% of Initial Margin.
  5. If the trader’s account balance falls below the Maintenance Margin requirement to maintain the current open position, the system will cancel the unmatched orders on that market to free up the margin requirements of those unmatched orders. If after doing this,  the account balance is still below the required Maintenance Margin, the system will take over the trader’s position and liquidate it.
  6. The Liquidation Engine takes over positions from traders whose account balance has fallen below the minimum required Maintenance Margin amount to maintain their open position on a futures market.
  7. After assuming a trader’s open futures position, the system will attempt to immediately close that position by submitting a buy or sell order at the bankruptcy price.
  8. The bankruptcy price is the price at which the trader will lose his entire Initial Margin amount that he posted to open the position.
  9. For Long positions, the bankruptcy price is calculated by subtracting the Initial Margin requirement from the trader’s entry price. For Short positions, the bankruptcy price is calculated by adding the Initial Margin requirement to the trader’s entry price.
  10. After assuming a trader’s position, if the system is able to liquidate that position at a better price than bankruptcy price, the additional funds are placed into the Insurance Fund.
  11. Example trade: Bob places a limit order to buy 1 BTC/USD futures contract at 10,000 at 100x leverage which requires Initial Margin of 100 DGTX. He has exactly 100 DGTX in his trading account and shortly after placing it, his buy order is filled. His Maintenance Margin requirement is therefore 50 DGTX, which means his account balance must have at least 50 DGTX in it to maintain this open Long position. If the price drops to 9,950 his account balance falls to 50 DGTX and the system will take over his position and will submit a sell order at the bankruptcy price of 9,900 (Entry Price – Initial Margin).
  12. In the above example, if the system submits a sell order at 9,900 when the last traded price is currently 9,950, it is probable that the position will be closed at a better price than 9,900. If the position is liquidated at 9,940, then 40 DGTX will be added to the Insurance Fund.
  13. This effectively means that traders who allow their position to be force liquidated by the exchange by allowing their account balance to go below the required Maintenance Margin level will always lose the full Initial Margin amount they posted to open that position, even if the position is closed at a better price than bankruptcy price. Any additional funds that are made by getting a better price than bankruptcy price are added to the Insurance Fund and not to the trader’s account. This will incentivize traders to avoid forced liquidations which are a risk vector for the exchange.
  14. This liquidation system is very similar to how BitMEX takes over and liquidates bankrupt traders’ positions. Note here how consistently their Insurance Fund balance increases with virtually no daily drawdowns of any significance over a period of years, even during periods of high volatility.
  15. The BitMEX Insurance Fund balance has increased 99 days out of the last 100 days and this is typical performance going back for years.
  16. If the Insurance Fund of the Digitex Futures exchange performed in approximately the same way as BitMEX’s Insurance Fund then we would have burned tokens 99 days out of the last 100 days.
  17. Instead of building up a huge Insurance Fund that may never be needed, Digitex can transfer that value to other Digitex (DGTX) token owners whilst still having the safeguard of an Insurance Fund.
  18. All account balances are denominated in Digitex (DGTX) tokens and all trading profits and losses are in Digitex (DGTX) tokens. Therefore, the Insurance Fund balance is denominated in Digitex (DGTX) tokens.
  19. The entire balance of the Insurance Fund will be burned every day at midnight UTC.
  20. This means the Insurance Fund will always be empty, but it has the power to issue new tokens to cover its liabilities. It is highly likely that the number of new tokens that must be occasionally issued to cover losses will be significantly less than the number of tokens that are burned every day.
  21. The token burning process will be fully verifiable and the corresponding number of Digitex (DGTX) tokens that are destroyed will be subtracted from the available supply as displayed on etherscan.io.
  22. In the event of system losses during periods of high volatility when the exchange is unable to liquidate assumed futures positions without suffering losses, the Insurance Fund can issue new Digitex (DGTX) tokens to cover those losses. This process will be fully verifiable and any new tokens issued will be visible on etherscan.io.
  23. The Insurance Fund will have its own page on the exchange where all token burning and token issuance activity and history can be clearly seen and verified on etherscan.io.
  24. Possible variations of this system that can be voted on by the DAO are whether we burn tokens on a weekly, monthly or quarterly schedule instead of daily. Also, the DAO can decide on whether to burn all tokens in the Insurance Fund or whether to keep a certain minimum balance to avoid the need for token issuance after one losing day.

We encourage you all to share your feedback on Telegram and/or Twitter, and we will collect all your questions throughout the week. This Friday, 28th June at 3 pm UTC, Adam will host another live AMA to further discuss the Digitex token burning proposal. Again, whether or not this will be implemented depends on the response from the community. We encourage you all to participate in sharing your feedback!

Latest News