A crypto derivatives exchange is a platform where users trade financial instruments derived from cryptocurrencies, like futures, options, and perpetual contracts. Unlike traditional crypto exchanges where actual cryptocurrencies are bought and sold, derivatives exchanges allow traders to speculate on the price movements of these assets without owning them directly. The key difference is that derivatives contracts offer leverage, enabling traders to control larger positions with a smaller amount of capital. This leverage can magnify both gains and losses. While traditional exchanges focus on spot trading (immediate buying or selling), derivatives exchanges cater to more complex trading strategies and are popular among experienced traders. They are often used for hedging, arbitrage, and speculative trading.
