Futures trading on a crypto exchange in India has grown exponentially, with the country ranking second globally in crypto adoption in 2024, contributing over $225 billion in trading volume. The futures market allows traders to leverage positions up to 20x. Not only that, 78% of Indian crypto enthusiasts engage in futures trading for portfolio hedging or short-term speculation. But if you are yet to start trading futures in crypto, you must be wondering about the process. Keep reading to get answers to all your queries.
Crypto futures trading is a derivative contract that allows you to buy or sell cryptocurrencies at a fixed price on a future date. In this, you don’t actually own the crypto. Instead, you are betting on whether its price will rise or fall. If you believe the prices will go up, you’ll go long,’ and if you expect it to drop, you’ll go short.’
In a hypothetical example, say you believe Bitcoin’s price will rise from ₹25,00,000 to ₹30,00,000 in the next month. Instead of buying actual Bitcoin, you enter a futures contract to buy 1 Bitcoin at today’s price of ₹25,00,000. If the price goes up as you predicted, and hits ₹30,00,000, you can sell your contract and pocket the ₹5,00,000 difference as profit (minus fees). If the price falls instead, you face a loss.
Now, here’s the catch. You don’t need the full ₹25,00,000 to enter the trade. You only pay a margin (a small percentage, like 5-10%) to your broker to take your position in the trade. This concept is called leverage.
For example, with 10x leverage, you only need ₹2,50,000 to control 1 Bitcoin worth ₹25,00,000. If the price moves in your favour, your gains are multiplied. But if it moves against you, losses are also multiplied.
Follow these easy steps to start your journey in trading crypto futures safely and smartly.
Before you jump in, let’s explore the main benefits and risks of trading crypto futures in India.
1. High Earning Potential
When you trade crypto futures, you get the chance to earn big, even if the market moves just a little. Because you can trade with leverage, your profits multiply faster than regular buying and selling. But remember, while the upside is attractive, you must control your risks wisely.
2. Profit from Falling Prices
You don’t have to wait for Bitcoin or Ethereum to rise to make money. Futures trading lets you “short” a coin, meaning you can earn even when prices fall. In India’s unpredictable crypto market, this gives you a real edge to benefit from all kinds of market movements.
3. No Need to Hold Actual Crypto
In crypto futures, you don’t need to own the actual coins. You only deal with contracts based on price movements. This saves you from worrying about wallet security, hacking, and complicated self-custody practices that are still major problems for retail investors in India.
1. High Risk of Losing Money
Leverage can be a double-edged sword. While it increases your profits, it also magnifies your losses. If you are not careful, even a small wrong move can completely wipe out your trading account. Many first-time traders in India lose money fast because they underestimate this risk.
2. Complicated Tax Rules
In India, the tax treatment for futures trading is messy. Your profits are taxed at 30%, without allowing any deductions except the cost of buying. You also pay 1% TDS (Tax Deducted at Source) on every trade. This eats into your profits much more than you might realise initially.
3. Poor Platform Choices
Many Indian exchanges still offer very limited futures options with bad liquidity and slow order matching. International platforms are better, but using them might expose you to regulatory risks, as Indian laws about foreign crypto trading platforms are unclear and could tighten any time.
Crypto futures carry risk. Here are some risk management strategies you can consider.
Always decide how much of your total capital you can bear to lose per trade, and stick to it. Most experienced traders risk only 1-2% of their funds on any single trade. This way, even if several trades go wrong, you avoid catastrophic losses and stay in the game longer.
Never enter a futures position without setting a stop-loss. Crypto prices move violently, and without an automatic exit, you can lose much more than planned. A stop-loss defines your maximum loss, saves you from emotional decisions, and protects your capital even when you are not watching the market.
Using 50x or 100x leverage can be tempting, but it also means a small move against you can liquidate your position. You should use low leverage, like 3x to 5x, to give your trades more breathing room and prevent quick wipeouts from normal market volatility.
Instead of entering your full position at once, you should scale into trades gradually. Buy or sell parts of your position at different price points. This way, you reduce the pressure of picking the perfect entry and allow yourself to adapt if the market moves against you initially.
Always trade futures contracts with high liquidity, like Bitcoin (BTC) or Ethereum (ETH) perpetual futures. Low-liquidity contracts can have large bid-ask spreads and sudden price spikes that can unfairly hit your stop-loss. Stick to instruments where your orders can be filled quickly and fairly.
Follow these practices to boost your chances of success and avoid common mistakes while trading crypto futures.
While crypto futures trading can be profitable, it’s essential to diversify your portfolio to reduce risk. Don’t just focus on Bitcoin and Ethereum; explore other altcoins to balance the overall risk. A diversified portfolio can buffer against sudden downturns in any one coin.
Crypto markets are driven by sentiment. Keep an eye on news, social media, and market trends to gauge how investors are feeling. Positive or negative news can have an immediate impact on price movements, so it is important to react swiftly to market sentiment shifts.
Technical analysis helps you interpret price charts and identify patterns that can predict future movements. Use tools like moving averages, RSI (Relative Strength Index), MACD, and candlestick patterns to understand market trends and make informed decisions.
Hedging helps protect your portfolio from large losses in highly volatile markets. In futures trading, you can hedge your spot positions by taking opposite positions in futures contracts. This can help offset potential losses in case of unexpected price movements.
Regulations in India regarding cryptocurrencies are still evolving. Stay updated on any regulatory changes or government announcements that could impact the legality or taxation of crypto futures trading. Being aware of legal changes helps you adapt your strategy accordingly.
ALSO READ: Crypto Futures vs. Traditional Futures: The Ultimate Guide to Key Differences
Trading crypto futures in India can open exciting opportunities, but it comes with serious risks. You can trade more confidently by choosing the right platform, using smart risk management, and staying updated on regulations. Always start slow, use low leverage, and learn from each experience. With the right strategies and discipline, you can make futures trading a rewarding part of your crypto journey.
If you want to trade crypto legally in India, turn to a reliable platform like Mudrex. For a smooth experience, download the Mudrex app on Android or iOS and follow crypto updates through our Telegram Channel.
You don’t need to invest huge amounts. Thanks to leverage, you can start with as little as 5–10% of the contract’s value. However, it’s wise to begin small and only trade money you can afford to lose.
Leverage lets you control a large position with a small amount of money. For example, with 10x leverage, you control ₹10,00,000 worth of crypto with just ₹1,00,000. While it increases profits, it also increases the risk of heavy losses.
The biggest risks are amplified losses due to leverage, rapid price swings, and unclear tax rules. If not managed carefully, you can lose your entire investment very quickly. That’s why it’s important to use stop-losses and trade responsibly.
Yes! Futures trading allows you to ‘short’ a cryptocurrency. That means you can earn profits when prices go down. This is very useful in India’s often volatile market, where prices can swing sharply in either direction.
Profits from crypto futures are taxed at a rate of 30%, similar to winnings from lotteries or other games. Also, a 1% TDS (Tax Deducted at Source) applies to every trade. You should keep detailed records and consult a tax expert if needed.
