What is futures trading in cryptocurrency and how can I benefit from it?
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Today, we're going to talk about cryptocurrency futures trading.
What are cryptocurrency futures?
Cryptocurrency Futures Is A Contract Between Two Users Betting On Cryptocurrency's Future Price. This allows users to be exposed to some cryptocurrencies without having to purchase them. Cryptocurrency futures are similar to standard futures contracts for goods or stocks because they can bet on the price trajectory of underlying assets.
There are many ways to be exposed to cryptocurrences, but futures trading is one of the most popular and convenient methods. Here's everything you need to better understand the complexity of futures trading. Provide better opportunities compared to spot and option trades. I know how to open long and short positions in multiple digital currencies. There's something you need to know exactly.
How to Trade Bitcoin Futures?
When trading Bitcoin futures, the first thing users need to decide is the duration of the contract. Cryptocurrency derivatives exchanges typically offer weekly, bi-weekly, quarterly options, and more.
For example, a weekly transaction of a Bitcoin contract equal to $1 with each contract priced at $10,000, requires 10,000 contracts to open a position worth 1 Bitcoin.
Users can bet on whether the price of Bitcoin will rise (long-term) or fall (short-. In both cases, the exchange platform connects the user with the person who went in the opposite direction on the betting side. By the time the contract is signed, one user will have to pay, depending on whether the price of Bitcoin has risen or fallen.
How to trade bitcoin options?
"Call" and "Foot" correspond to Bitcoin options, while "Long" and "Short" correspond to futures. The call option grants the right to purchase Bitcoin at an agreed price upon expiration of the contract. The put option grants the right to sell Bitcoin at an agreed price upon expiration of the contract.
For example, let's say a user buys a Bitcoin call option for $20,000 with a contract that expires in a month. If the price of Bitcoin rises to $25,000 by the end of the month, users will likely exercise their right to buy Bitcoin and benefit from it.
On the other hand, if the price drops to $15,000 at the end of the month, users are likely to opt for option expiration to avoid losing money, except for the premium they initially agreed to pay for a contract purchase. .
How to trade indefinite contracts?
If many users have long positions and indefinite contract prices are increasingly higher than spot prices, people will have no incentive to open short positions. The result is a positive funding rate.
Having a positive funding rate means that all long positions have to pay for all short positions. On the other hand, the negative funding ratio means that all short positions must pay long positions.
This arrangement helps to encourage users to liquidate their long positions and open their short positions to return the price of their assets (e.g., Bitcoin) to their actual market prices. Payment is made directly to the user and not through exchange.
How to trade cryptocurrency futures?
Cryptocurrency futures trading is not different from other forms of transaction, and the difficulty depends on the leverage selected. Most valid rules must be followed when trading in the spot market or other derivatives (CFD or option). Most rules relate to risk management and finding the best starting and ending points.
Key Steps To Successfully Launch Your Crypto Futures Trading Journey.
Keep some funds aside.
One of the most important risk management recommendations is that you should not invest more than you are ready to lose. Do not borrow for trading unless you are talking about technical borrowing used for margin trading.
devote one's time to
Cryptocurrency futures trading should not be treated as a hobby if you plan to switch to profitable activities. You should spend time learning futures trading, finding the right entry point, and monitoring open positions.
a free trading bonus
You can start a transaction using a transaction bonus that receives 5% of the deposit and covers 20% of the loss.
How Profitable Are Crypto Futures Trading?
Cryptocurrency futures trading can be very profitable if appropriate risk management is implemented. For end users, this activity may be more profitable than bitcoin mining, given that bitcoin mining requires expensive equipment. But this is the best case scenario. As with all forms of transaction, there are significant risks that should not be ignored.
Cryptocurrency Has High Market Risks And Volatility Despite Its High Growth Potential. It is strongly recommended that users investigate and invest at their own risk. BitMart will do its best to list only high-quality coins, but will not be responsible for any investment losses.