What Are Futures?
Futures are financial contracts to buy or sell an asset at a set date in the future for a fixed price. Futures trading benefits investors by allowing them to offset or assume the risk of a price change of an asset over time.
Futures contracts are available for a variety of markets including commodities, stock indexes, currencies, and more. Different-sized contracts allow traders to participate in these markets with reduced financial commitment.
Kraken Derivatives US futures products now include Bitcoin (BTC), Micro Bitcoin (MBT), Ether (ETH), Micro Ether (MET), Solana (GSOL), and Micro Solana (MSL). We now offer 75 new Crypto and TradFi contracts across CME, CBOT, NYMEX, and COMEX exchanges: Indices: S&P 500 and NASDAQ 100; Commodities: Gold and oil; FX: EUR, GBP, AUD; more: Rice, lumber, cattle, you name it.
Futures originated in commodity markets, helping buyers and sellers hedge against price changes. For instance, a grain buyer could lock in a future price for wheat to avoid spikes during harvest season. This idea evolved into modern futures, which cover commodities, indexes, interest rates, and digital assets like crypto.
In essence, a futures contract allows you to lock in a market price now for a transaction that occurs later. This benefits both parties: buyers secure a price, and sellers know what they'll earn. In today’s markets, futures are primarily used for speculation or hedging against price swings. With Kraken Derivative US's offering, you're trading highly liquid, regulated CME futures products in a simple, cash-settled format.
Futures trade nearly 24 hours a day, five days a week. Trading begins Sunday at 5:00 p.m. CT and ends Friday at 4:00 p.m. CT. Kraken Derivatives US recognizes a "day-trading session" cutoff at 3:45 p.m. CT, after which any open positions must meet initial margin requirements to be held overnight.
This broad schedule provides flexibility and the ability to respond to market events at nearly any hour. The trading hours are governed by the contract’s exchange—in this case, the CME Group for all crypto products at launch.
Orders are the primary mechanism for entering and exiting futures positions. Understanding order types is foundational to building a trading strategy:
Market Order – A market order is a basic order type that instructs the broker to buy or sell at the best available price. Market orders are considered to be the most immediate way to enter or exit a trade and are often executed instantaneously.
Limit Order – A limit order is an order type that enters an order to buy or sell a futures contract at a specific price or better. Limit orders do not guarantee a fill, they do allow the trader to specify a price to prevent negative slippage.
Stop Market Order – A stop market order is an order type that issues a market order once a specified price has been reached, known as the stop price. Once the stop price has been touched or surpassed, the stop market order becomes a market order and will execute at the best possible price.
Stop Limit Order – A stop limit order is similar to a stop market order, except that when the stop price is touched or surpassed, a limit order is issued. This gives you more control of where the order will execute but on the other hand, does not guarantee a fill.
Trailing Stop Order – A trailing stop order allows the stop price to follow or "trail" the market at a specified distance. If the market moves in your favor, the stop price adjusts; if it moves against you by the trailing amount, the order becomes a market order.
Trailing Stop Limit Order – This functions similarly to a trailing stop order, but instead of becoming a market order, it triggers a limit order when the trail is hit. This gives you more control over the price but does not guarantee execution in fast-moving markets.
All these order types will be available at launch to help you manage risk and enter or exit positions more effectively.
Margin in futures trading refers to the amount of equity that a trader must deposit with a broker to cover any credit risk. Margin in futures acts as a performance bond - a deposit to ensure a trader can cover potential losses. A trader can buy on margin by borrowing money from a broker to purchase a futures contract. When trading futures there are different types of margin that one must understand.
Intraday Margin: Intraday margin is the minimum balance your account must maintain per contract while in a trade during normal U.S. trading hours. Intraday margin rates are effective from the product's open until 15 minutes before the session close, when initial margin is required.
Initial Margin: Initial margin is set by the exchange and is a percentage that a trader must post in order to hold a position in the next trading session. Initial margin can change frequently and can fluctuate based on volatility. They are only applicable when the market is closed.
Maintenance Margin: This is the minimum amount of equity a trader must have in their account at any given time to hold positions over multiple sessions. If funds drop below this account you may receive a margin call requiring you to receive funds immediately to bring the account back to the initial margin level. If you do not do this it can result in a full or partial liquidation.
Where intraday margin allows users to trade at higher leverages, the likelihood of liquidation also increases. Kraken Derivatives US offers a toggle to allow traders to select between using intraday margin vs. initial margin for order form validation as a way to mitigate risks early on and ensure positions opened are manageable. If initial margin is used, liquidations are less likely as validation will prevent traders from submitting orders that could otherwise liquidate them intraday or overnight. Traders can still reach liquidation thresholds if the performance of their assets send them to high margin levels and it is up to the trader to monitor their positions.
Leverage in futures allows traders to control large notional values with smaller deposits, amplifying potential gains and losses. For example, with $1,000 of margin, you might control a $10,000 contract—that’s 10x leverage.
Unlike other leveraged instruments, futures use regulated, exchange-defined margin rules, providing clarity on your maximum exposure. But with higher leverage comes higher risk: price movements can quickly impact your available balance, leading to liquidation if margins aren't maintained.
Liquidity represents the number of participants currently engaged in a market. In futures, liquidity refers to trading volume and order book depth, facilitating efficient entry and exit market prices. Liquid markets have consistently high levels of trading activity, which results in efficient pricing and execution.
Liquidity gives traders opportunities to buy or sell at every price level. Without it, no one would be able to get the prices they wanted. If a speculator is “long”, then they want the market to go up to sell at a higher price. If a speculator is “short, then they want the market to go down to buy back at a lower price.
Futures contracts expire monthly or quarterly depending on the product. Prior to expiration, traders either close their positions or manually "roll" them by opening a position in the next active contract month.
Kraken Derivatives US does not currently offer automatic rollovers. If your contract is still open at expiration, it will be cash-settled. You'll see a corresponding debit or credit in your account based on the final settlement price. You should monitor their contract maturity dates to ensure that they close their contract prior to maturity if they want more control over their positions.
All contracts are cash-settled—you never take delivery of the underlying asset.
PnL (Profit and Loss) in futures is calculated using Mark-to-Market (MtM) methodology:
Unrealized PnL: Based on current price vs. entry price. Visible in your Kraken UI.
Realized PnL: Captured when a position is closed. Adjusted for any fees.
Settlement PnL: Final Mark-to-Market accounting at the end of each trading day, shown in your FCM statement.
Your Kraken interface reflects real-time PnL for open and closed positions, but full accounting including settlement adjustments will be available in your FCM daily and monthly reports.
Brokerage services are provided by NinjaTrader Clearing, LLC doing business as Kraken Derivatives US, a Futures Commission Merchant registered with the Commodity Futures Trading Commission (CFTC) and a member of the National Futures Association (NFA ID #0309379).