Chinese exchange OKCoin announced today it will add futures trading to its platform, saying it is one of the first major exchanges in the world to offer users the chance to trade futures denominated in bitcoin.
OKCoin’s futures trading, which will be in beta for the next two weeks before going live, partly solves bitcoin’s price volatility problem and reduces risks by allowing bitcoin earners to ‘lock in’ a future price.
More advanced traders can use futures to utilize higher leverage opportunities for price speculation. Trading of derivatives like futures also serves to move volatility away from the underlying asset and ultimately causes prices to become more predictable overall.
Professional trading tools
Founder and CEO of OKCoin, Star Xu, said it was part of the company’s plan to bring institutional and professional trading tools to digital currency investors and help build the bitcoin trading platform of the future:
“Today’s launch of bitcoin futures trading capabilities builds on the algorithmic trading tools we pioneered and launched on our platform last month. We have already seen a favorable response from institutional and individual investors. We are helping to make participation in bitcoin a more safe and stable process. The ability to trade futures will further cement our position as one of the world’s leading bitcoin exchanges.”
OKCoin’s chief technology officer Changpeng Zhao said that OKCoin would ascertain it was gathering accurate pricing data with a US dollar index based upon prices from 10 different bitcoin exchanges.
Reducing risk in bitcoin investment and trading was a major factor in increasing bitcoin adoption, he added.
Seeking more professional customers
Beijing-based OKCoin, like mainland China’s other ‘big three’ exchanges, is increasingly seeking business from a new breed of professional digital currency traders in lucrative external markets like Hong Kong, Singapore, Taiwan and the US.
Along with new English-language sites and support, the companies are adding a variety of ‘pro’ features. Huobi has just opened its margin trading system and interest-bearing bitcoin ‘savings accounts’ to all after a successful six-week beta trial, and BTC China’s new mobile app offers real-time market data and a fast-trading interface.
Other Asia-based exchanges, like Hong Kong’s Bitfinex and BTC.sx, which is dual-incorporated in the UK and Singapore, also offer their own implementations of margin trading and derivatives.
OKCoin itself launched an English website, P2P margin trading and a range of algorithmic trading tools in June, with an aim to making things easier for larger- and higher-volume traders.
The largest mainland Chinese exchanges offer extremely low or even 0% trading fees, which also attracts high frequency traders and increases liquidity.
Volatility image via gopixa / Shutterstock