How to Trade Crypto Futures in the UK

Authored by:
Thomas Drury
Thomas Drury

Thomas Drury

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Seasoned finance professional with 10+ years' experience. Chartered status holder. Proficient in CFDs, ISAs, and crypto investing. Passionate about helping others achieve financial goals.

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Dom Farnell
Dom Farnell

Dom Farnell

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Dom is a Co-Founder and of TIC. A passionate investor and seasoned blog writer with a keen interest in financial markets and wealth management.My goal is to empower individuals to make informed investment decisions through informative and engaging content.

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Last Updated 11/02/2024
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Please keep in mind that Crypto assets are volatile and currently unregulated. This volatility presents risk to your investment, and you may lose your funds. Profits from Cryptocurrency sales may be subject to Capital gains tax under UK law. To trade futures in the UK, you will not find legally a UK regulated exchange. Off shore exchanges may offer these services but they will not be FCA regulated so please act with caution.

Quick Answer: How can you Trade Crypto Futures in the UK?

In the UK, for example, while the FCA bans retail consumers from trading crypto derivatives, platforms like MEXC offer these services globally, including to UK users, from their offshore bases, bypassing the ban and direct FCA oversight. Users should tread carefully, considering the regulatory landscape.

Crypto Futures Trading Platform Comparison Chart

MEXC
OKX
Coinbase
Spot Trading Fees
0.1% for some pairs, Zero fees for selected pairs
0.08% for makers, 0.10% for takers
Varied fees based on pricing tiers
Futures Trading Fees
0.01% for makers, 0.05% for takers
0.02% for makers, 0.05% for takers​
Not applicable
Leverage
Up to 200x
Up to 100x on futures, 10x on spot trades
No
Number of Coins
1,520+ cryptocurrencies​
320+ tradable cryptocurrencies
Extensive range, exact number varies
User Base
Info not found
Over 20 million users worldwide
Large global presence
Deposit Methods
Crypto, Visa/Mastercard, Bank Transfer, etc.​
Crypto deposits; Fiat not supported directly​
Bank transfers, Debit/Credit cards
Withdrawal Fees
No fiat withdrawals​
Competitive crypto withdrawal fees​
Varies by asset and method
Security
High, with cold storage for assets​
Proof of Reserves (PoR) report, $14.5 billion in assets
High, adheres to U.S. regulations
Regulation
Unregulated in most jurisdictions​
Largely unregulated in major markets
Heavily regulated, U.S.-based
User Experience
Versatile platform for all levels
User-friendly, suitable for beginners and pros​
Known for trustworthiness, user ed.
Special Features
Copy Trading, Token Launchpad​
Spot Copy Trading across 120 spot pairs, Smart Account feature​
Crypto educational courses
Geographical Availability
Almost every country​
160+ countries, not available in North America
Global, focus on the U.S. market

Top 3 Crypto Trading Platforms in 2024

4.5/5

TIC MEXC Review Score 4.5/5

MEXC Futures - Best Exchange for Pro Traders

MEXC is a leading global cryptocurrency exchange known for its wide array of digital assets, including Cardano, and its user-friendly trading platform. It stands out for its robust security measures, competitive fees, and a strong commitment to customer support, catering to both novice and experienced crypto traders.

Pros

Cons

Please keep in mind that Cryptocurrency assets are volatile and currently unregulated. This volatility presents risk to your investment, and you may lose your funds. Profits from Cryptocurrency sales may be subject to Capital gains tax under UK law.

mexc spot trading webpage snippet
MEXC Desktop Screen Grap
4.4/5

TIC OKX Review Score 4.35/5

OKX - Best Exchange Overall

OKX Exchange, established in 2017 and headquartered in Seychelles, is a dynamic player in the global cryptocurrency market, offering a wide array of trading options and advanced security measures.

Pros

Cons

Please keep in mind that Cryptocurrency assets are volatile and currently unregulated. This volatility presents risk to your investment, and you may lose your funds. Profits from Cryptocurrency sales may be subject to Capital gains tax under UK law.

OKX Spot Trading Desktop Screenshot to Demonstrate Interface for OKX Review fees
OKX Spot Trading Desktop View
4.2/5

TIC Coinbase Review Score 4.2/5

Coinbase - Best for Beginners

Coinbase is renowned for its user-friendly interface, making it an ideal choice for beginners entering the cryptocurrency space. It also offers a robust security framework and a wide range of cryptocurrencies, ensuring a secure and diverse trading experience.

Pros

Cons

Please keep in mind that Cryptocurrency assets are volatile and currently unregulated. This volatility presents risk to your investment, and you may lose your funds. Profits from Cryptocurrency sales may be subject to Capital gains tax under UK law.

Coinbase Advanced Screenshot desktop Coinbase Review
Coinbase Trading Screen Grab

Introduction to Crypto Futures

Crypto futures represent a cornerstone in the dynamic world of cryptocurrency trading, enabling traders to predict and bet on future price movements of digital currencies without the need to possess the actual asset.

Essentially, these contracts are agreements to buy or sell a particular cryptocurrency at a specified price on a future date, serving both speculative purposes and as a hedge against market volatility.

Particularly, Bitcoin futures stand out for their potential to diversify trading strategies, allowing investors to gain exposure to Bitcoin’s price movements while managing risks more effectively.

This mechanism not only broadens the scope and limits the availability of investment opportunities but also introduces a strategic layer to trading in the digital asset markets.

concept of buying crypto futures in the UK. It features a futuristic trading dashboard with cryptocurrency trends, subtly incorporating the Union Jack to blend the themes of the UK and financial technology. Iconic UK landmarks stylized with digital and crypto motifs serve as a backdrop, emphasizing the fusion of traditional UK imagery with modern crypto trading.
mexc futures trading webpage screengrab
Screen Grab of MEXC Trading

Regulatory Landscape in the UK

In the UK, the trading of crypto futures is a topic wrapped in stringent regulations and tax implications, necessitating a careful approach for traders to navigate this complex landscape successfully. Here’s a concise guide to help UK traders understand the regulatory framework, tax considerations, and how to select a compliant platform for crypto futures trading.

Navigating FCA Regulations

  • FCA’s Stance: The Financial Conduct Authority (FCA) has implemented a ban on the sale of crypto derivatives, including futures, to retail consumers, effective from January 6, 2021. This measure aims to protect retail investors from the high risks associated with these products.
  • Impact for Traders: Only professional or institutional investors have the green light to engage in crypto futures trading within the UK’s regulatory environment. Retail traders should exercise caution and ensure any activity is in line with FCA guidelines to avoid potential legal and financial repercussions.

Understanding Tax Implications

  • Capital Gains Tax (CGT): Profits from crypto futures trading may be subject to CGT, depending on individual circumstances. It’s crucial for traders to maintain detailed records of their transactions to accurately report any gains or losses.
  • HMRC Guidelines: The HM Revenue and Customs (HMRC) provides specific guidelines on the taxation of crypto assets, including futures. Traders are advised to consult these guidelines or seek professional tax advice to navigate the tax obligations efficiently.

Selecting a FCA-Regulated Platform

  • Compliance is Key: Given the FCA’s strict regulations, choosing a platform that adheres to these rules is paramount for UK traders. This ensures the safety of funds and personal data, alongside legal compliance.
  • Research and Due Diligence: Traders should conduct thorough research on available platforms, focusing on their regulatory status, security measures, and the range of services offered. Preference should be given to platforms explicitly regulated by the FCA or those operating in jurisdictions with robust financial regulations.
  • Professional and Institutional Access: While retail access to crypto futures is restricted, professional and institutional traders can look towards platforms like BitMEX, Deribit, and others that offer crypto futures trading. It’s essential to verify the platform’s compliance with FCA regulations and its suitability for your trading needs before engagement.

In summary, trading crypto futures in the UK requires a deep understanding of the regulatory landscape, a clear grasp of the tax implications, and a cautious approach in selecting a compliant trading platform. By adhering to these guidelines, UK traders can navigate the complexities of the crypto futures market more safely and effectively.

Trading Stategies and Risk Management

Trading Strategies

Navigating the volatile waters of the UK’s crypto futures market requires a blend of technical savvy, real-time insights, and strategic hedging. Below, we delve into strategies that can help traders leverage opportunities and mitigate risks in this dynamic trading environment.

Technical Analysis Techniques 

Technical analysis stands as a cornerstone for traders aiming to predict future market movements by analyzing past and current price action and volume data. In the UK crypto futures market, several techniques are pivotal:

  • Chart Patterns and Trends: Identifying patterns like triangles, head and shoulders, or flags can signal potential market movements. Trends, whether upward, downward, or sideways, guide traders on when to enter or exit trades.
  • Moving Averages: Utilizing moving averages helps smooth out price data over a specified period, providing insights into the market trend’s direction. The crossover of short-term and long-term moving averages can signal entry and exit points.
  • Momentum Indicators: Tools such as the Relative Strength Index (RSI) or the Moving Average Convergence Divergence (MACD) can indicate whether an asset is overbought or oversold, helping to time trades more effectively.

Capitalising on UK-Specific News

News and events significantly impact the crypto market, causing price volatility. UK traders can capitalize on this by:

  • Staying Informed: Follow real-time news sources and crypto market analysis platforms. UK regulatory announcements, economic indicators, and global crypto news can all influence market sentiment and prices.
  • Event-Driven Trading: Be on the lookout for scheduled events such as Brexit developments, Bank of England monetary policy announcements, or major global cryptocurrency regulations that can cause market movements.
  • Risk Management: Use news and events to inform your trading strategy but always apply risk management techniques such as stop-loss orders to protect against sudden market moves.

Portfolio Hedging Guide

Hedging is a strategy used to offset potential losses in one’s investment portfolio by taking an opposite position in a related asset. In the UK crypto futures market:

  • Diversification: Spread your investments across different crypto futures contracts to mitigate risk. Diversification can protect against market volatility and sector-specific downturns.
  • Short Positions: If you hold a significant position in a cryptocurrency, consider taking a short position in its futures market as a hedge against potential price declines.
  • Leverage: Use leverage cautiously when hedging as it can amplify both gains and losses. Ensure your hedging strategy is well thought out and aligns with your overall risk tolerance.

Exploring Arbitrage

Arbitrage involves capitalizing on price differences of the same asset across different markets. For UK traders, arbitrage can be a lucrative strategy in the crypto futures market:

  • Spot-Futures Arbitrage: This involves buying a cryptocurrency in the spot market while simultaneously selling futures contracts of the same cryptocurrency at a higher price, locking in the price differential as profit.
  • Cross-Exchange Arbitrage: Take advantage of price discrepancies for the same crypto futures contract across different exchanges. This requires quick execution and low transaction costs to be profitable.
  • Triangular Arbitrage: This complex strategy involves trading across three different cryptocurrencies to exploit price discrepancies. It requires a deep understanding of market dynamics and swift execution.

Each of these strategies requires a deep understanding of market mechanisms, swift decision-making, and an unwavering commitment to risk management. By incorporating these approaches, UK traders can navigate the complexities of the crypto futures market with greater confidence and strategic acumen.

OKX Advanced Trading UI Mobile Screengrab
OKX Advanced Trading UI Mobile Screengrab
trading strategies and risk management. It visualizes the analytical and strategic aspects of trading through the depiction of a trader surrounded by various digital screens showcasing charts, graphs, and risk management tools. This illustration emphasizes the importance of a methodical approach to trading, including the evaluation of risks and rewards.

Understanding Leverage and Its Risks

  1. Understanding Leverage in Futures Trading:

    • Leverage allows traders to control larger positions with a smaller capital investment.

    • It magnifies both potential profits and losses in proportion to the chosen leverage level.

  2. Potential Benefits of Leverage:

    • Leverage can amplify profits, offering the opportunity for significant gains.

    • It allows traders to access larger positions than they could with their own capital alone.

  3. Risks Associated with Leverage:

    • On the flip side, leverage can lead to substantial losses, and even a small adverse price movement can wipe out an entire investment.

    • It amplifies the impact of market volatility, making risk management paramount.

  4. Essential Aspects of Risk Management:

    • Setting stop-loss orders at predefined price levels helps limit potential losses.

    • Diversifying a portfolio across different assets spreads risk.

    • Proper position sizing ensures that traders don’t overcommit to a single trade.

  5. Significance of Regulated Platforms:

    • Trading on regulated platforms ensures adherence to financial standards and operational integrity.

    • Regulated platforms prioritize client protection and provide a safer environment for leveraging trading strategies in the volatile crypto market.

Triangle diagram showing how leverage works when shorting

Exploring Market Trends

Analytic charts market trends

When it comes to exploring market trends in cryptocurrency futures, it’s essential to consider the broader landscape beyond Bitcoin. Here’s an analysis:

  1. Diverse Cryptocurrency Futures: While Bitcoin futures remain a focal point, there’s a growing interest in futures contracts for other cryptocurrencies like Ethereum, Ripple, and Litecoin. These offer traders opportunities beyond the Bitcoin market.

  2. Rising Popularity of Altcoins: Altcoins (alternative cryptocurrencies to Bitcoin) are gaining traction in the futures market. Traders are exploring futures contracts on assets like Ethereum (ETH), which has seen significant growth.

  3. Emergence of Crypto ETFs: Exchange-traded funds (ETFs) tracking cryptocurrency indices have become increasingly popular. These ETFs provide exposure to a basket of cryptocurrencies, simplifying diversification.

  4. Commodities and Stocks in Futures: Some platforms offer futures contracts tied to traditional assets like commodities (e.g., gold) and stocks (e.g., tech companies). These contracts enable traders to diversify their portfolios further.

  5. Leveraging Traditional Assets: futures can serve as a hedge against traditional market movements. Traders may turn to futures during stock market volatility or economic uncertainty.

Overall, the futures market is evolving, with traders exploring a more extensive range of assets and investment opportunities, including ETFs, commodities, and stocks, to diversify, increase their exposure and adapt to changing market conditions.

Platform Setup and Usage for UK Crypto Futures Trading

menu home page mexc screengrab low fees statement
MEXC Low Fees Statement

Trading crypto futures in the UK involves a careful setup of your trading platform, familiarization with the trading interface, understanding of risk management tools like stop-loss and take-profit orders, and mastering advanced orders for strategic trading. Here’s a guide to navigate these aspects efficiently.

Step-by-Step Guide: Setting Up Your UK Futures Account

  1. Choose a Reputable Platform: Select a platform that complies with UK regulations, offers robust security measures, and provides a comprehensive range of crypto futures products.
  2. Registration: Sign up by providing your email address, setting a strong password, and completing any KYC (Know Your Customer) requirements. This may include uploading ID documents and a proof of address.
  3. Deposit Funds: Fund your account using the accepted methods such as bank transfer, credit card, or cryptocurrencies. Check for any deposit fees or minimum deposit requirements.
  4. Familiarize with the Platform: Take the time to explore the platform’s features, tools, and educational resources to get comfortable with its environment.

Exploring the Trading Interface: Your First Futures Trade

  1. Market Analysis: Before executing your first trade, analyze the market using the platform’s charting tools and indicators. Decide on the crypto asset you wish to trade.
  2. Order Placement: Learn how to place orders. This involves choosing the type of order (e.g., market, limit), setting the quantity, and specifying the price (if applicable).
  3. Monitoring and Closing Your Position: After placing your trade, monitor its performance. Use the platform’s tools to adjust your strategy as needed and close your position when you reach your target or to cut losses.

Risk Management Essentials: Using Stop-Loss and Take-Profit

  1. Stop-Loss Orders: These are designed to limit an investor’s loss on a position. Set a stop-loss order at a price level that represents a tolerable loss for you. It’s crucial for mitigating the risks of sudden market downturns.
  2. Take-Profit Orders: Set take-profit orders to automatically close your position once it reaches a certain profit level. This helps in securing profits in volatile markets.
  3. Risk-Reward Ratio: Balance your risk-reward ratio wisely. A common strategy is to aim for a risk-reward ratio of 1:3, ensuring potential rewards outweigh the risks.

Mastering Advanced Orders: Strategy Tips for Futures Trading

  1. Leverage Advanced Orders: Beyond basic market and limit orders, utilize advanced order types like OCO (One Cancels the Other), trailing stop, and iceberg orders for more strategic trading.
  2. Strategic Use: Use these advanced orders to manage risks and capitalize on market opportunities more effectively. For instance, a trailing stop order can protect profits by allowing a position to remain open and continue to profit as long as the price is moving in your favor.
  3. Continuous Learning: Stay informed about new order types and trading strategies through ongoing education and practice. Many platforms offer demo accounts to practice trading without financial risk.

Setting up and using a crypto futures trading platform in the UK requires a careful approach to ensure compliance with regulations, effective risk management, and strategic trading. By following these guidelines and continuously enhancing your trading skills, you can navigate the UK crypto futures market more confidently and successfully.

Conclusion

OKX Home Page to demonstrate interface for OKX Review
OKX Home Page Screen Shot

To excel in the dynamic and often unpredictable world of crypto futures trading, it’s essential to arm yourself with knowledge, understand common pitfalls, and draw inspiration from successful traders. Here’s a comprehensive guide to help enhance your trading skills, avoid common mistakes, and navigate the complexities of the market.

Key Mistakes to Avoid

  1. Lack of Research: Jumping into trades without adequate market research and understanding of the crypto asset can lead to significant losses.
  2. Overleveraging: Using excessive leverage can amplify losses, especially in volatile markets. It’s crucial to use leverage judiciously.
  3. Ignoring Risk Management: Not setting stop-loss orders or ignoring risk management principles can result in unrecoverable losses.
  4. Emotional Trading: Allowing emotions to drive trading decisions often leads to poor outcomes. Stick to your trading plan.

Crypto Futures Glossary

  • Futures Contract: An agreement to buy or sell a particular crypto asset at a predetermined price at a specified time in the future.
  • Margin: The collateral required to open a futures position.
  • Leverage: Borrowed funds used to increase the potential return of an investment.
  • Liquidation: The closure of a position due to the loss of all or most of the initial margin.
  • Settlement: The process by which a futures contract is resolved either through cash payment or the physical delivery of the asset (rare in crypto).

 

By avoiding key mistakes, understanding the fundamentals through a comprehensive glossary, seeking answers to common questions, and learning from successful traders, you can significantly enhance your proficiency and potentially increase your success in the UK crypto futures market. Continuous education, disciplined trading, and risk management are the pillars of long-term success in the volatile world of cryptocurrency trading

FAQs

To trade futures in the UK, you will not find legally a UK regulated exchange. Off shore exchanges may offer these services but they will not be FCA regulated so please act with caution.

Futures contracts are agreements to buy or sell cryptocurrencies at a specified price on a future date. They enable traders to speculate on price movements without owning the underlying assets.

Yes, Bitcoin futures are accessible in the UK through unregulated platforms. These bitcoin futures allow traders to bet on the future price of Bitcoin.

Effective trading strategies can optimise profits and minimize losses in futures trading. Strategies like technical analysis, diversification, and risk management play a vital role.

The appropriate leverage level varies based on your risk tolerance. It’s crucial to choose a level that allows you to maximize potential profits while managing risks effectively. Leverage will cause greater losses.

Protect your account by setting stop-loss orders, diversifying your portfolio, and sizing your positions correctly. These risk management techniques help limit potential losses.

Some platforms offer futures contracts tied to traditional assets like commodities and stocks. This allows traders to diversify their exposure beyond cryptocurrencies.

Regulation ensures the protection of traders and the integrity of the trading environment. Regulated exchange platforms adhere to financial standards and provide a safer trading experience.

ETFs (Exchange-Traded Funds) tracking cryptocurrency indices offer a convenient way to gain exposure to a basket of cryptocurrencies, simplifying diversification in futures contract trading.

To stay informed, regularly follow reputable financial news sources, explore and join online communities, and monitor official announcements from regulatory bodies. Additionally, consider subscribing to newsletters or joining forums dedicated to futures trading.

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Epilogue

 
Who Created This Content: This guide was authored by Thomas Drury is an experienced financial trader in leverage intruments, crypto and general investing.

He has over a decade experience in finance and holds Chartered Status in the financial industry, Thomas’s specialty is trading CFDs, Forex and Day Trading.

His crypto portfolio is heavily weighted towards Bitcoin and Ethereum, but enjoys trading low cap crypto’s with higher volatility. Thomas’s favourite trading strategy is break out Trading.

How This Content Was Created: Our assessment of the the crypto trading of futures is rooted in rigorous research and firsthand experience. Here’s our methodology:

  • Platform Testing: We actively tested multiple platforms over a span of six months, analysing their functionalities, ease of use, and reliability.

  • Fee Analysis: Each platform’s fee structure was dissected to ascertain its competitiveness in the market.

  • User Feedback: We engaged with real users and considered their reviews and experiences, lending a holistic perspective to our evaluation.

  • Market Dynamics: Regular updates from industry news, changing regulations, and market dynamics ensure the guide remains current and reliable.

  • AI-Assistance: While human judgment and expertise are at the core of our assessments, we utilized AI tools to improve structure, critique our work.

Note: Our use of AI tools is strictly for data gathering and content assistance. All conclusions drawn and recommendations made are based on human analysis and judgment.

Why This Content Was Created: Our primary objective in creating this guide is to empower traders, both seasoned and novices, with impartial, comprehensive, and actionable information to make informed decisions.

We understand the complexity of the stock trading world and aim to simplify it for our readers.

While we hope our content is discoverable by those seeking insights, our main priority is to provide genuine value to our visitors.

We staunchly oppose content creation practices that manipulate search rankings or violate any standards of integrity.

#1 Recommended Exchange for Pro Futures Traders

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