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TradFi futures give you 24/7 access to stocks, indices, and precious metals using the same tools you already use for crypto. Before opening your first position, though, there are mechanics and risks worth understanding. While the product works like crypto perpetuals, the underlying assets behave differently. This guide covers what experienced traders usually know and what new traders often learn the hard way.
Explore TradFi Futures on Phemex
This Is Not Stock Ownership
The most important point to understand is that TradFi futures are derivative contracts, not securities.
When you buy Apple stock through a brokerage, you become a partial owner of Apple Inc. You may receive dividends, vote on shareholder proposals, and hold registered equity.
When you trade Apple TradFi futures on Phemex, none of that applies. You hold a contract that settles in USDT based on price movement. Apple does not know you exist, and there is no ownership involved.
This difference is not a drawback. It reflects a different product designed for a different goal. Stock ownership focuses on long-term investment, while futures trading focuses on price direction.
If dividends, voting rights, or long-term equity exposure matter to you, a brokerage account is the right tool. If you want leveraged price exposure with 24/7 access, TradFi futures are built for that purpose.
Leverage Works Both Ways
Leverage allows you to control a larger position with less capital. With 10x leverage, a $100 margin controls $1,000 in exposure.
A 5% move in your favor results in a $50 gain, which is a 50% return on your margin. The same move against you results in a $50 loss.
As leverage increases, smaller price movements can eliminate a position entirely. A 10% adverse move at 10x leverage wipes out the full margin.
A practical approach is to start with lower leverage, such as 2x to 5x, until you understand how traditional assets move. The Phemex futures interface allows leverage to be adjusted before each trade.
Liquidation Happens Automatically
If a position moves against you far enough, the exchange closes it automatically. This process is called liquidation.
Liquidation occurs when your margin falls below the maintenance margin requirement. At that point, the position is closed at market price and your initial margin is lost.
Phemex uses Mark Price, a fair value derived from multiple sources, rather than last traded price. This helps reduce liquidation risk caused by temporary price spikes or wicks.
How to avoid it:
Use stop-loss orders on every position
Monitor your margin ratio in the trading interface
Use isolated margin to limit risk to specific positions
Don't over-leverage
A stop-loss is a controlled exit that you define. Liquidation is an uncontrolled exit determined by the system.
Funding Rates Add Ongoing Costs
TradFi futures on Phemex are perpetual contracts with no expiration date. Positions can be held indefinitely, but doing so comes with ongoing funding costs.
Every eight hours, funding payments are exchanged between long and short positions to keep contract prices aligned with the underlying asset.
When funding is positive, longs pay shorts
When funding is negative, shorts pay longs
During strong directional markets, funding fees can accumulate over time. This is especially relevant for positions held over multiple days.
The key takeaway is that TradFi futures are designed for active trading rather than passive holding. Always check current funding rates before entering a position.
24/7 Trading Doesn't Mean 24/7 Identical Conditions
TradFi futures can be traded at any time, including weekends and holidays. Market conditions, however, change depending on whether traditional markets are open.
During off-hours:
Bid–ask spreads may widen
Order books may be thinner
Price movements can be sharper due to lower liquidity
Underlying spot markets such as the NYSE, NASDAQ, or COMEX operate on fixed schedules. When they are closed, reference prices are not actively discovered, even though futures continue trading.
Being aware of market open and close times helps manage risk, particularly around weekend gaps or major news events.
Stock-Specific Risks Apply
Stocks react to events that don't affect crypto:
Earnings reports — Companies announce quarterly results, often after market close. Stock prices can gap 10-20% overnight.
Analyst ratings — Upgrades and downgrades move prices, sometimes sharply.
Regulatory announcements — FDA approvals, antitrust actions, government contracts.
Macroeconomic data — Interest rate decisions, employment reports, inflation data.
When you trade TradFi futures, you're exposed to these events 24/7. You can react immediately, but you're also at risk around the clock.
Practical approach: Check economic calendars and earnings schedules. If you're trading Tesla futures, know when Tesla reports earnings. If you're trading gold, watch Fed announcements.
Pre-Trade Checklist
Before opening any TradFi futures position, confirm:
Item | What to Check |
Leverage | Am I using a leverage level I'm comfortable with? |
Position Size | How much of my account am I risking on this trade? |
Stop-Loss | Where will I exit if the trade goes against me? |
Take-Profit | What's my target? What's my risk/reward ratio? |
Funding Rate | Will funding costs affect my holding period? |
Market Hours | Is the underlying spot market currently open? |
News Calendar | Are there any scheduled events that could move this asset? |
This checklist applies to every trade. The more routine it becomes, the fewer surprises you'll encounter.
Who Should Trade TradFi Futures?
TradFi futures may be suitable for:
Crypto traders seeking exposure to stocks or precious metals
Active traders who want to respond to news outside market hours
Users familiar with margin and liquidation mechanics
Traders who want diversification using a single USDT balance
They may be less suitable for:
Investors seeking long-term stock ownership
Users focused on dividend income
Beginners unfamiliar with futures trading
Anyone unable to actively monitor positions
TradFi futures serve a specific trading purpose. Matching that purpose with your goals matters.
Key Takeaways
TradFi futures provide price exposure to traditional assets without ownership. Leverage increases both potential gains and potential losses, and funding rates create ongoing costs. Liquidity conditions vary throughout the day, and risk management remains essential.
Understanding these mechanics before trading helps reduce avoidable mistakes.
