7 Strategies for Trading Crypto Futures that Work

This article will explore the strategies for trading crypto futures that work.

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Crypto futures trading has been in high demand lately. Cryptocurrency is not a niche market, and it’s one of the fastest-growing segments in the world.

This is why it’s not surprising that futures trading has many advantages over traditional markets. Continue reading to learn more about seven cryptocurrency futures trading strategies that you might like to try.

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Strategies for Trading Crypto Futures
Photo credit: TheBitTimes

What is Trading Cryptocurrency Futures?

The trading of crypto futures allows investors to speculate about the future value of cryptocurrency assets. This type of trading can be done using derivatives contracts such as options or futures.

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Contracts for crypto futures are contracts to purchase or sell cryptocurrency at a fixed price later. The contracts can be traded on exchanges, and the market determines their prices.

A contract can be purchased by investors who believe the price of a cryptocurrency will rise in the future. A contract can be sold by those who believe the price will fall.

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The contract will expire, and the investor can either make or lose money depending on the actual price of the cryptocurrency.

Although trading crypto futures is risky, it can also prove profitable. To maximize their chances of success, those willing to take on the risk may use various strategies.

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How Does Crypto Futures Trading Work?

The concept of crypto futures trading allows traders to place bets on the future price of a cryptocurrency. A bitcoin futures contract can be purchased if the trader believes the Bitcoin price will rise. The trader will profit if Bitcoin’s price rises and the trader will lose his money if the price falls.

On exchanges, you can trade crypto futures contracts. These exchanges are a place for traders to trade contracts, and the supply and demand of traders determine the price of crypto futures contracts.

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It is risky to trade crypto futures, and it can also be lucrative if it is done right. When trading crypto futures, traders can use a variety of strategies.

Day trading, swing trading, and trend following are some of the most common strategies traders use when trading crypto futures.

7 Strategies for Trading Crypto Futures that Work

Here are the 7 strategies for trading crypto futures that work:

1. Do Your Research

Investments come with inherent risks. Investors must do their research thoroughly before investing any money, and Bitcoin is riskier than traditional investments like bonds and stocks.

An investor can evaluate a stock’s earnings and revenue or analyze interest payments to assess a bond. However, Bitcoin’s fundamental indicators might be less tangible.

Bitcoin’s complicated underlying technology has many lakes indicators. Learning about Bitcoin can take a lot of time and effort, and several materials are available. 

Investors can begin with the Bitcoin whitepaper. It was distributed in 2008 by Satoshi Nakamoto (the pseudonymous creator) of Bitcoin. 

2. Take care

Investors have many options to reduce the risk of Bitcoin trading. Potential Bitcoin traders need to remember the old saying that you should only lose what you can afford.

A trader interested in trading could also open a practice account at an exchange to learn more about the Bitcoin markets.

After gaining a sense of the market, an investor could open a regular account to trade cryptocurrency.

Read also:

The 10 Best Crypto Futures Exchange In the USA

10 Best Crypto Futures Trading Platforms in France

10 Best Crypto Futures Trading Platforms In Australia

10 Best Crypto Futures Trading Platform in India

3. Make a Plan

Before trading, investors should have a plan. Many beginner traders make the mistake of not having a plan. Investors should determine the best time to enter a trade before making any trades. Investors should also determine the best time for them to exit.

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Investors can gain from knowing their profit goals before they make trades. Investors should also determine how much money they are willing and able to lose, which will help them create stop losses.

4. Stage In

Stage-in is a great way to manage Bitcoin’s volatility. This involves incremental investments in digital currency.

A trader could start by buying PS20 worth of Bitcoin. Then, they would wait a week and buy another PS20 worth.

5. Hedging your bets

Another way to reduce the volatility of Bitcoin is to hedge. There are many tools investors have at their disposal to help them do this. To achieve this goal, traders can use options.

Options contracts let the contract holder manage the risk of a specific asset’s rise and fall. An option contract could be purchased by an investor that would payout if the underlying asset falls in value.

Investors who have Bitcoin could also purchase options contracts to limit any losses they might experience if the currency falls in value.

Bitcoin investors have the option of trading futures contracts based on digital currency. Futures contracts require two parties to exchange money at a specific date and for a predetermined amount.

6. Diversify

Bitcoin traders also have the option to diversify. Bitcoin is not the only digital currency that is largest in terms of market capitalization. If investors are interested, there are many other options they can use.

Diversification implies that you are not putting all of your eggs in one basket. A diverse portfolio allows investors to avoid losing money because of fluctuations in its components.

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A diverse portfolio could include five digital currencies: Bitcoin, Ethereum, Ripple, and Litecoin-LTC. These could include Ether (Bitcoin), Ripple, and Litecoin. Each of these components should make up 20% of the portfolio, and another would accompany a loss in one.

But, not all situations are ideal. Investors who want to achieve adequate diversification have many options.

7. Use wallets

Another way to leverage your strategy is to use digital currency wallets.

Many exchanges have been compromised. Bitfinex, a major digital currency exchange, was the victim of this hack in August 2016, and it lost 120,000 bitcoin units.

Mt. In 2014, 850,000 bitcoin units were lost when Gox was compromised. This amount of digital currency was valued at close to US$500million (roughly PS300 billion) at the time.

These incidents are just two of many security breaches in the space for digital currency. Bitcoin investors can protect their digital currency holdings by using wallets, and these wallets can protect traders from losing their trades if the exchange goes out of business.

You can use several strategies to increase your success in trading crypto futures. It is essential to understand the market and your goals. Second, it’s okay to take risks, and that’s part and parcel of the game.

Third, keep an eye out for market trends to ensure that your strategy aligns with them. These tips will help you make profitable trades quickly.

Watch the video below to know the strategies for trading crypto futures:

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