Comparing BitStar CFDs and typical digital currency futures

BitStar derivatives trading platform currently features Bitcoin, Litecoin, Ethereum, and Ethereum Classic contracts for difference (CFDs). If you have traded digital currency futures contracts on other exchanges, you will find trading BitStar CFDs to be a similar experience. Futures and CFDs are both leverage trading instruments. However, there are some key differences which, in our opinion, make BitStar CFDs a qualitatively better product.

No delivery

Typical digital currency futures contracts expire on weekly, monthly, or quarterly basis, depending on the specific market. At contract expiration time, you must take delivery: your open positions will be closed and your profit or loss will be realized. If you wish to continue holding a long or short position through the expiration time, this is not possible; you must open a new position in the new contract. This is an inconvenience for traders because they must be manually involved in rolling over their position to the new contract. It can also cut into profits because of price slippage when rolling over a large position and the price difference between the old and new contracts.

BitStar CFDs, on the other hand, do not have delivery. When you open a position, you can theoretically keep the position open forever (or until you get liquidated). You will never have to think about rolling over a position again.

Index-based liquidation

Unlike typical digital currency futures, BitStar CFDs forced liquidation trigger is based on the spot market index price, not the contract price. This makes stop loss hunting (a market manipulation strategy) virtually impossible, which protects traders from the cascading liquidations that often occur in futures markets. Because the liquidity of any one particular futures market is always going to be substantially less than the combined liquidity of several major spot markets, it will always be much easier for a big market participant to execute a stop loss hunting strategy on a futures market. BitStar CFDs completely avoid this danger by using index-based liquidation triggers.

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