A quote reads “The goal of a successful trader is to make the best trades. Money is secondary.” If you are into trading, you know that cryptos like Ethereum and Bitcoin have gained immense attraction in mainstream media. Investors these days are finding their way to crypto exchanges. Thanks to the best crypto exchanges! They provide different kinds of trading opportunities to traders and investors alike based on their investment strategies. Examples include options trading, Bitcoin futures trading, spot trading, etc. If you would like to learn about crypto futures trading, the information given below will help:
Bitcoin Futures Trading – An Intro:
In Bitcoin futures and other crypto futures trading, as an investor, you can speculate on the future value of the digital currency. You can go short to judge a drop in the price or can go long to benefit from a price advance. The use of leverage is one of the key advantages of futures trading.
Achieve Better Capital Efficiency:
With leverage, you can achieve better capital efficiency. The reason is that you need not have to lock up the whole capital. It enhances not only potential risks but also returns. As there is an increase in risk, you will have to be a bit cautious when investing.
If you are new to Bitcoin futures trading, a leverage of 2-times or 5-times would be suitable. You should follow this rule particularly if you wish to utilize crypto derivatives as a self-protective hedge for your portfolio. It is recommended because when an asset performs poorly or against what was previously speculated, futures trade hedged against this result with a particular amount of leverage can pay for the loss.
Now, when you choose a crypto trading platform to engage in Bitcoin futures trading, the 3 beginner tips given below will help:
3 Tips For Effective Bitcoin Futures Trading:
1. Implement Risk Management Tools:
The first thing you will have to do before you trade Bitcoin futures is to look for ways to mitigate your risk. For instance, let us consider that you hope to make a larger profit like many other traders. When you buy Altcoins with lesser market caps, you will face a higher risk. So, you should take steps to diversify your portfolio. It means that you will have to invest in different cryptocurrencies.
Do not stop with just Bitcoin futures. Rather, invest in different cryptocurrency futures. Every day, you should calculate your risk/return ratio. Also, you should be cautious with position sizing. You should rely on the “Take Profit and Stop Loss” tools.
2. Establish A Trade Plan:
When you are engaged in Bitcoin trading, you should pay attention to planning your trades cautiously before establishing a position. It means that apart from having a profit goal, you should have an exit plan in place.
You should immediately get out if the trade goes against you. Emotions like greed or fear should not dictate your moves. You should exit when you are in a profitable position.
3. Be Aware of the Basics:
You should understand the key elements of the market before you start trading. You should learn how cryptocurrencies will be used in the future and how blockchains work.
Learn about tokens and smart contracts on the blockchain. Before you invest in Bitcoin futures, you should assess the market.
Crypto Futures trading unlike spot trading does not require traders to hold any assets for participation. Rather, traders look to sell or buy derivatives contracts. These contracts denote the value of a specific crypto like Bitcoin at a particular future date. So, invest wisely and reap the benefits. Happy Trading!