The use of leverage and collateral to trade cryptocurrencies is complex and risky. When trading futures, you may realize substantial gains or losses and should be well prepared before you begin trading. Relatively small price movements will have a larger impact on your trading. Even in times of low price volatility, it is possible for the total balance in your futures wallet to be liquidated. Please read below to learn more about the risks of futures trading.
Trading in futures markets is high risk. The market price of any futures product does not reflect the price of spot markets in the applicable underlying assets, and fluctuates significantly in response to the value of the underlying asset’s price, supply and demand, and other market factors. For instance, a small price decrease on a 100x leveraged product’s underlying digital asset could result in 100x loss in your leveraged position in the product. Placing contingent orders, such as “stop-loss” or “stop-limit” order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.
As such, futures trading can lead to significant losses in a short period of time arising from relatively small market movements. They are complex financial derivatives which use leverage extensively, which entails significant risk, and which require initial and ongoing posting of collateral to ensure margin requirements are met. Because of this, futures products are not suitable for all users. They are designed to be utilized only by highly sophisticated traders. Use extreme caution when trading in these markets and trade them only if you understand how they work, including but not limited to the risks associated with the use of leverage, the consequences of seeking daily leveraged investment results, the risk of shorting, and the effect of compounding and market volatility risks on leveraged products. You may sustain a total loss of the initial margin funds and any additional funds deposited into your account on the Poloniex platform to maintain your positions. If the market moves against your position or margin levels increase, your position will be liquidated, and you will lose all of your funds.
Futures products may incur high portfolio turnover and rebalancing to manage the exposure to the underlying digital asset. High levels of transactions increase transaction costs. Each of these factors could have a significant negative impact on the performance of a leveraged or futures product. Learn more about the risks in Section 15 of our Terms of Service.