FTX Exchange is a cryptocurrency exchange specialising in offering a derivatives trading platform for traders. The Exchange is launched in 2019 by Alameda research – a trading firm responsible for 30% of the trading volume on the major cryptocurrency exchanges out there. Hence they advertise themselves as built by traders, for traders. In this review, we’ll look at what FTX has to offer and their trading fees and discounts. Finally, we will take a look at what security features they offer to keep users safe.
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FTX Exchange specialises in derivatives trading with a few spot markets. However what they specialise in they do very well, and a lot of the trading products on offer are unique to FTX Exchange. Here’s some of the key features they offer.
- FTX Futures
- FTX Options
In particular, FTX has several unique products on offer, these are:
- FTX MOVE Contracts
- Leveraged Tokens
- Prediction Markets
Let’s take a look at each of these features in turn.
Futures trading means that the buyer is obligated to purchase or deliver a specific cryptocurrency at a specified future. With FTX, traders can trade their cryptocurrencies at up to 100x leverage on most futures contracts. This means that you can borrow up to 100 times your capital to increase your position and maximise your profits. However this does contain an element of risk so traders should be careful when trading using leverage.
Options trading is different that futures trading in that the buyer/seller has an option, rather than an obligation to buy/sell the cryptocurrency at a specified price and date. FTX allows users a high degree of customisation, so they can set a specified price and date and give this quote to FTX. FTX will then reply with a bid or offer on your proposal within 10 seconds, after which users will have the choice to accept the options contract or not.
FTX MOVE Contracts
FTX MOVE Contracts are a unique product created by FTX. The contracts represent the value the cryptocurrency has moved in a period of time-irrespective of whether the value increases or not. For long MOVE contracts, traders will win if the price of the BTC moves a lot in either direction during the contract period. Whereas for short MOVE contracts, traders will win if the value of the cryptocurrency is relatively stable. MOVE contracts can be daily, weekly, or quarterly.
FTX also offers leveraged long or short MOVE contracts.
Leveraged tokens are ERC20 tokens with leveraged exposure to cryptocurrencies and are another unique product to FTX. Traders can buy this token which will track the price of an underlying cryptocurrency. FTX offers types of 4 leveraged tokens: BULL (+3x), BEAR (-3x), HEDGE (-1x), and HALF. These leveraged tokens are available for every future on FTX. So using ETHBEAR as an example, if ETH goes up 1% during the day, ETHBEAR goes down 3%. The leveraged tokens “rebalance” every day at 00:02:00 UTC, meaning that the token will trade on FTX to return to its 3x, -3x, -1x or 0.5x leverage, as the case may be.
These tokens can be traded on FTX, or even other exchanges such as BitMax, Gopax and others. Traders can also convert their coins on FTX into a leveraged token, or create and redeem leveraged tokens.
A unique product on FTX, prediction markets are speculations on real world events, but unlike most other products the contracts settle at either 0% or 100% i.e. win or lose. The most popular prediction market on FTX is the President 2020 Contracts– referring to betting on the 2020 presidential elections. For example, the TRUMP-2020 (TRUMP) contract will expire to USD $1 if Donald Trump wins the 2020 US presidential election, or USD $0 otherwise.
Over The Counter (OTC) trading
FTX has its own OTC trading desk. This means traders who want to buy or sell a large amount of cryptocurrencies can make use of FTX’s OTC trading desk. With OTC trading, buyers and sellers are matched up, so the cryptocurrencies are traded at an agreed upon price and time, irrespective of the fluctuations in its value. With FTX, users can request quotations using the FTX OTC Portal and can expect preferential rates for larger trade volumes. One huge advantage of FTX’s OTC trading desk is that no fees are charged outside of the spread.
FTX Token ($FTT)
FTT is the FTX’s own token. Holders of FTT can use the token on the Exchange or even trade it like an asset. On the Exchange, FTT holders enjoy benefits such as lower trading fees, being able to use it as collateral for futures trading, getting socialised gains from FTX’s insurance fund, and reaping the benefits of FTX’s buyback and burning of the token.
FTX Services and FTX Token (FTT) are not available to users located or residing in the United States, Cuba, Crimea, Sevastopol, Iran, Syria, North Korea, Antigua or Barbuda.
Basic FTX users will be charged 0.02% for maker fees and 0.07% for taker fees. However like most exchanges, FTX incentivises people who trade more by offering tiers of fees. The more you trade, the less the fees charged.
Discounted fees are offered for FTT holders. The more FTT you hold, the greater the percentage discount on trading fees, as well as other privileges.
Other fees charged by FTX include:
- Leveraged tokens: 0.01% for creation and redemption, 0.03% for daily management.
- Leveraged trading: 0.02% increase in trading fees for using leverage of 50x, and 0.03% increase for 100x leverage. These fees are paid to FTX’s insurance fund.
- Deposits and withdrawals: Free. However, a fee of up to 0.10% may be charged in the case of users whose fiat/stablecoin deposit/withdrawal volume exceeds their trading volume.
- OTC trading: prices are included in the quoted price.
- Converting tokens: prices are included in the quoted price.
- MOVE contracts: fees depend on the price of the underlying index.
Whilst FTX is a relatively new exchange, it so far has an excellent security record. The team behind FTX, Alameda Research are experienced and extensive traders, lending to FTX’s strong reputation. For security, the Exchange requires users to use two-factor authentications (2FA) to log in. The Exchange also has an insurance fund to protect customers suffering losses in the case of sudden and huge market fluctuations which could liquidate many open positions on the Exchange.
Conclusion: FTX Exchange Pros and Cons
- Unique trading products not available on other exchanges.
- Specialised in derivatives trading.
- Has its own OTC trading desk. Convenient for traders with large amounts of assets they want to trade.
- From our research, not much is known about the security measures they offer. Though the Exchange does have a reputable team behind it and a good track record so far.
- Some major countries, such as the United States are restricted from using FTX
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