Futures are a widespread instrument for trading commodities and stocks, popular among experienced traders.
The difficulty of this tool lies in price prediction, which is possible only if you have enough experience and expertise.
Trading crypto futures is even more complex compared with traditional markets because cryptos are incredibly volatile, and it is much harder to predict their rates.
Requirements for successful Crypto Futures trading
- In-depth market research
- Constant news tracking
- Learning crypto charts
- Picking a strategy
- Finding a reliable crypto futures exchange.
Is trading Futures profitable?
First, let’s determine what trading Crypto Futures is. Futures are agreements made between two traders who speculate on the future price of a digital asset. Those agreements do not mean that the participants buy coins here and now. Instead, they claim the day when they will do it in the future and the price. That is, futures trading implies betting on the further price trajectory.
The trajectory may be up or down. The most popular strategy to trade crypto futures is “long and short”. The long position is opened when you believe that the coin’s price will grow. So, one can plan to sell their coins at a high price and make money from it.
The short position is open when one wants to protect their capital from market volatility. By a contract, they must buy coins on the date they set and at a price they claim (reduced).
Leverage is an often-used additional tool in futures trading. It allows you to open the position with a bigger amount, even when you have just a small sum.
The leverage ratio may be 2X, 5X, 10, 20, etc., or even 100X. Every crypto futures exchange offers its own conditions and leverage.
Futures trading can be very profitable and bring lucrative returns if one has enough experience and are able to assess the market and use leverage smartly. It is always advisable to begin with the smallest leverage ratio and handle the technique without a rush.
One can also try Futures trading using a demo account. It helps one understand how this tool works and allow them to try different leverage ratios without fear of losing real funds.