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:

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.

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:

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.