Futures trading is a popular advanced tool in traditional markets, allowing traders to speculate on commodities prices. This financial instrument is based on a trader’s thorough understanding of the market and the ability to foresee its movements, considering all the external factors that may have an impact on it.
Crypto futures trading has the same idea – speculation and risk hedging based on the analysis and predictions made concerning an underlying asset. In the digital space, the tool of the future appears to be even riskier because predictions on the crypto market are rarely precise. The fact is that this market is not regulated and only depends on the balance between demand and supply as well as media coverage. Anything may happen next moment, and the market will turn in another direction. So in this article, we would like to underline 7 things you should know about cryptocurrency futures trading:
- Pick a strategy
- Use stop-loss
- Do not trade on several markets at once
- Do not rush
- Use margin
- Be patient
- Go long and short.
Let’s consider some of these paragraphs in more detail.
Have a Plan
In any business, having a plan is halfway to success. You should select a futures trading strategy and set a real objective for it. Also, you should know under what conditions you will exit your position. For example, if the market moves against you. Think carefully about risks you take and use such tools as stop-loss. A plan is needed to help you be consistent and not to be guided by emotions.
Determine with Stop-Loss
Stop-loss is not the price you keep in your head, for when the asset reaches it, you will leave your positions. It is easy to ignore such a price level. You should better use a stop-loss instrument to leave the market as soon as the asset reaches the level you set for yourself. The program will automatically execute your exit.
Do Not Be Distracted On Other Markets
Crypto futures trading is quite a complex instrument. It requires that you constantly track the market and analyze it, watch the trends, news background, etc. So it would be wrong to start a few different market trading simultaneously, for it will not allow you to focus on futures trading in full.
Take your time and develop your trading methodology, and when you find the best trading style, increase your order size little by little. Do not invest large amounts as long as you are only looking for your best trading strategy.
To trade crypto futures, you may use the WhiteBIT crypto exchange. To learn more tips on trading, welcome to the WhiteBIT blog.