FTX

FTX: A Beginner's Guide to a Now-Defunct Exchange

FTX was a popular cryptocurrency exchange that allowed people to buy, sell, and trade cryptocurrencies like Bitcoin and Ethereum. It also offered more complex trading products like futures contracts. This guide explains how FTX *used to* work for beginners, and why understanding its downfall is important for anyone entering the crypto space. **Important Note:** FTX filed for bankruptcy in November 2022 and is no longer operational. This guide is for educational purposes only, to understand how exchanges work and what risks are involved.

What is a Cryptocurrency Exchange?

Think of a cryptocurrency exchange like a stock exchange, but instead of trading stocks, you’re trading digital currencies. It’s a platform that brings buyers and sellers together. Before FTX’s collapse, it was a central place where people could:

• **Buy Cryptocurrency:** Use traditional money (like US dollars) to purchase crypto.
• **Sell Cryptocurrency:** Convert crypto back into traditional money.
• **Trade Cryptocurrency:** Exchange one cryptocurrency for another (e.g., Bitcoin for Ethereum).

Other exchanges still operating include Register now, Start trading, Join BingX, Open account, and BitMEX.

How FTX *Used To* Work: A Step-by-Step Guide

These steps describe how FTX functioned before its bankruptcy. Keep in mind that the platform is no longer active, but these steps illustrate the general process for using *any* crypto exchange.

1. **Account Creation:** You would have started by creating an account on the FTX website. This involved providing an email address, creating a strong password, and verifying your identity (a process called Know Your Customer (KYC)). 2. **Funding Your Account:** To trade, you needed to deposit funds into your FTX account. This could be done via:

   *   **Bank Transfer:** Linking your bank account.
   *   **Credit/Debit Card:**  Using a card (often with higher fees).
   *   **Cryptocurrency:** Depositing crypto from another wallet.

3. **Navigating the Exchange:** FTX had different sections for different types of trading.

   *   **Spot Market:**  For buying and selling crypto directly at the current market price.  This is the simplest way to start.
   *   **Futures Market:** For trading contracts that represent the future price of a cryptocurrency. This is more complex and involves leverage.

4. **Placing an Order:** Let’s say you wanted to buy Bitcoin. You would:

   *   Select BTC/USD (Bitcoin paired with US Dollars).
   *   Choose your order type:
       *   **Market Order:** Buys or sells immediately at the best available price.
       *   **Limit Order:**  Lets you set a specific price at which you want to buy or sell.
   *   Enter the amount of Bitcoin you want to buy.
   *   Confirm the order.

5. **Withdrawing Funds:** When you wanted to cash out, you could withdraw your funds from FTX back to your bank account or another crypto wallet.

FTX's Trading Products

FTX offered a variety of trading options. Understanding these is key to understanding the risks involved.

• **Spot Trading:** Buying and selling crypto directly.
• **Futures Trading:** Trading contracts based on the future price of crypto. This involves leverage, which can magnify both profits *and* losses.
• **Options Trading:** Trading contracts that give you the right, but not the obligation, to buy or sell crypto at a specific price.
• **Margin Trading:** Borrowing funds from the exchange to increase your trading position. (Highly risky.)
• **Prediction Markets:** Betting on the outcome of future events.

FTX vs. Other Exchanges

Here’s a comparison of FTX (as it was) with some currently operating exchanges:

Exchange	Fees (Spot Trading)	Security Features	Trading Options
FTX (defunct)	Relatively low	Standard 2FA, but lacked robust safeguards	Spot, Futures, Options, Prediction Markets
Register now Binance	Variable, based on trading volume	2FA, Whitelisting, Address Management	Spot, Futures, Options, Margin Trading
Start trading Bybit	Competitive	2FA, Cold Storage	Spot, Futures, Perpetual Contracts

The Fall of FTX: A Cautionary Tale

FTX collapsed in November 2022 due to allegations of mismanagement of funds and fraudulent activities. Here are key takeaways:

• **Commingling of Funds:** FTX allegedly used customer funds to cover losses at its affiliated trading firm, Alameda Research. This is a major breach of trust.
• **Lack of Transparency:** The company’s financial statements were opaque and lacked proper auditing.
• **Poor Risk Management:** FTX took on excessive risk with customer funds.
• **Importance of Regulation:** The collapse highlighted the need for stronger regulation of the cryptocurrency industry.

Key Concepts to Understand

• **Blockchain**: The technology underlying cryptocurrencies.
• **Wallet**: Where you store your cryptocurrency.
• **Decentralization**: The principle of removing control from a single entity.
• **Volatility**: The tendency of crypto prices to fluctuate rapidly.
• **Market Capitalization**: The total value of a cryptocurrency.
• **Technical Analysis**: Using charts and indicators to predict price movements.
• **Fundamental Analysis**: Evaluating the underlying value of a cryptocurrency.
• **Trading Volume**: The amount of a cryptocurrency traded over a period of time.
• **Risk Management**: Strategies to protect your capital.
• **Diversification**: Spreading your investments across different assets.
• **Dollar-Cost Averaging**: Investing a fixed amount of money at regular intervals.

Learning More and Staying Safe

The FTX collapse serves as a stark reminder of the risks associated with cryptocurrency trading. Always:

• **Do Your Own Research (DYOR):** Don’t rely on hype or recommendations.
• **Understand the Risks:** Cryptocurrencies are volatile and you could lose money.
• **Use Secure Exchanges:** Choose reputable exchanges with strong security measures.
• **Protect Your Private Keys:** Never share your private keys with anyone.
• **Start Small:** Don’t invest more than you can afford to lose.
• **Stay Informed:** Keep up-to-date with the latest news and developments in the crypto space.
• **Explore different trading strategies**: Day Trading, Swing Trading, Scalping, Position Trading.
• **Learn about trading volume analysis**: Volume Weighted Average Price (VWAP), On Balance Volume (OBV), Accumulation/Distribution Line.

Conclusion

While FTX is no longer an option, understanding its history and how it *used to* operate is valuable. It highlights the importance of understanding the risks involved in cryptocurrency trading and choosing a secure, reputable exchange. Always remember to prioritize your security and do your own research before investing.

Recommended Crypto Exchanges

Exchange	Features	Sign Up
Binance	Largest exchange, 500+ coins	Sign Up - Register Now - CashBack 10% SPOT and Futures
BingX Futures	Copy trading	Join BingX - A lot of bonuses for registration on this exchange

Start Trading Now

• Register on Binance (Recommended for beginners)
• Try Bybit (For futures trading)

Learn More

Join our Telegram community: @Crypto_futurestrading

⚠️ *Disclaimer: Cryptocurrency trading involves risk. Only invest what you can afford to lose.* ⚠️