Jul 08, · With Bitcoin futures trading, traders can easily execute both short-term and long-term trading strategies or safeguard any existing Bitcoin holdings. Bitcoin Futures Trading uses margin and leverage trading to control the Bitcoin Futures positions. Hence, allows efficient use of account equity. Learning the most popular Bitcoin Futures trading strategies in use today can be a smart way to improve your positioning and overall crypto skill level. Savvy investors understand that no one can predict with % accuracy the turns the market will take. However, there are some methods traders use to reduce their risk and improve their profits. Nov 01, · “Going long” is arguably the most used and simplest strategy in the bitcoin futures market. If you think the price of bitcoin is going to rise you buy a futures contract – also known as going long. You can buy futures that expire soon, say in a month or two, or futures that expire far in the future, .
Bitcoin futures trading strategyBitcoin Futures Trading Strategies - affcrypto.de
Another reason Bitcoin has become so popular in the trading space is that, as an asset, it ticks some of the boxes that make it highly profitable — when the right trading system is used. The high volatility of the asset, coupled with its global liquidity and availability, means that there are a number of ways in which Bitcoin trading can be affected.
However, determining the best investment strategy, and how to start trading Bitcoin for profit , requires a bit of research and knowledge as there are a number of options available to traders, but they all have their strengths and weaknesses.
Beginning on your Bitcoin trading journey is very easy. In fact, as compared with more traditional means of trading and investing, Bitcoin is one of the simplest, and most inclusive. All a trader really needs to begin trading is a Bitcoin wallet , and all a person needs to get a Bitcoin wallet is a smartphone. A Bitcoin wallet allows a person to buy, hold, and sell Bitcoin straight away — usually through an exchange which can be linked to the wallet.
Simply buying, holding and selling Bitcoin is an actual trading strategy, and one of the more popular ones at that. Once you have a Bitcoin wallet, you are then able to purchase Bitcoin through traditional means, like bank payments or card purchases, and from there, you can use you Bitcoin on various platforms that are amenable to different trading strategies. For instance, a platform like Binance offers futures trading options on Bitcoin and other cryptocurrencies — and that may be the trading strategy you use as the best way to make money off of cryptocurrencies.
Then again, PrimeXBT offers margin trading services and that would suit your Bitcoin trading strategy better. Open free account. Bitcoin has been around for over 10 years now, but in terms of it being an investable and tradable asset, that drive has only come recently. The biggest advantage that Bitcoin has over other traditional stocks, bonds, assets and commodities is that it is a volatile market.
Volatility is often seen as a bad thing, but it is a double-edged sword, and for Bitcoin, the majority of its volatility has been in an upwards trajectory making it an asset that offers high profitability.
More so, Bitcoin is easy to acquire and an inclusive asset that needs a person to only own a smartphone and have as little as10 to their name to begin trading.
Bitcoin trading is also designed to be easy for these very reasons. Many of the platforms that offer trading have attempted to make it easy and uncomplicated to attract new users to the space. Bitcoin is also an asset unlike any other.
It operates a bit like a digital gold, in that it does not exist in the physical realm and has the properties of gold when it comes to accruing value, but it is also decentralized, which means there is no one entity that controls it. So, when you invest in a stock, your stock price can fluctuate depending on what businesses decisions the company takes, but that does not happen with Bitcoin. Other advantages to trading in Bitcoin include the fact it has a transparent, immutable ledger to track and trace transactions.
It is a scarce resource with there only ever being 21 million in existence, it has low transaction fees which are often taken into consideration by certain trading platforms, and probably — most importantly, Bitcoin is the best performing asset of the last decade by a considerable margin.
This strategy is arguably the easiest , most common, and highly prized Bitcoin Trading strategy. The other big advantage of this method of trading is that it is incredibly simple. In fact, the loss could be even greater than your initial investment when bitcoin futures contracts are purchased on margin. While leverage can increase profits dramatically, it can also increase losses dramatically. When you sell a futures contract, it simply represents your commitment to sell the underlying asset, in this case bitcoin, at a set price at a set time in the future.
Aside from the psychological roadblock associated with going short, selling a bitcoin future is no harder than buying. If you believe the price will fall, you go short. You get to sell as easily as buying. If your analysis of the market is correct and the price of bitcoin falls, you earn a profit. The third bitcoin futures trading strategy — day trading — combines the previous two strategies into one. Day trading is a popular strategy used by traders who want to get in and out of positions to make a small profit on each trade.
They do that several times throughout the day. Bitcoin is known for its volatility, and traders who close their futures positions at the end of each trading day know they will avoid any strong moves against them that could cause a massive loss. There is an expiration date for both the call and put options. Between these 6 months, you can sell the Bitcoin at any time.
January 1, , then using the call option is quite worthless. When such situations appear, then two things can happen:. Hence, if the price of Bitcoin is falling before the expiration date, the options become worthless. What is the Marubozu candlestick? To process this transaction, you choose an exchange like CME. The CME exchange will compensate your contract partner for this. They will take the difference which is USD from your so-called margin account and give it to Mark.
This kind of settlement is performed on the expiration date of the futures contract as well as every day of trading based on the current price of Bitcoin. In order to ensure that you have money in your margin account, you should put up an initial margin at the beginning of the contract.
The minimum margin is also defined by the broker. If your money in the margin account falls from your initial margin to the maintenance margin or minimum margin, then the exchange triggers a margin call where the broker requests you to fill your margin account to the initial margin. If you are unable to fill the margin account even after the margin call, then the broker has the right to sell your Bitcoins at a price that is more unfavorable than waiting for a good opportunity.
So, it is better to avoid margin calls. So, Bitcoin Futures trading can be done on various places which include:. While you know how to trade Bitcoin Futures, it is also necessary to understand where to trade them. You should find a trustworthy exchange which offers good security and an easy to use interface. So, it is better to do proper research before you choose an exchange platform to begin trading. Several platforms, financial institutions, and various cryptocurrency exchanges have signaled to launch Bitcoin Futures on their platform.
CBOE is one of the largest cryptocurrency futures exchange platforms in the world. It is also the first exchange platform to launch Bitcoin Futures. Bitmex is a cryptocurrency exchange that offers Bitcoin Futures trading to everyone except to the U.