Bitcoin and other digital currencies are risky investments. Many traders attempt to control their risk by simply buying or selling an asset when the price falls or rises.
The disadvantage of this strategy is that money is frequently left on the table once you exit the market. If the price rises after you sell, for example, you’re losing the money you could have made if you’d kept your position open. Futures trading has the advantage of allowing you to hedge existing spot bets without the need for new coins, allowing you to be flexible and prepared for any market condition.
Cryptocurrency futures enable you to enhance your profits by leveraging the power of leverage and employing smart trading tactics. Use futures to speculate on market direction and reduce risk while holding less cryptocurrency than on a spot exchange.
What is futures trading?
Futures, often known as futures contracts, are agreements to acquire or sell an asset at a fixed price at a later period. Traders generally utilize them to protect other investments or lock-in profits when trading in unpredictable markets. Futures prices are usually based on aggregated indices that measure demand for each cryptocurrency across multiple exchanges, making pricing on platforms like Delta Exchange always clear and transparent.
How do cryptocurrency futures work?
Cryptocurrency futures use the same rules and structure as traditional futures trading. To begin trading, you must first open an account with the brokerage or exchange. You can start trading once your account has been approved. To execute trades in futures trading, a lot of leverage is used. The leverage amount might vary significantly between exchanges in the unregulated Wild West of cryptocurrency. For example, Delta offers up to 100x leverage for futures trading!
Margin requirements and contract specifications are the most important factors to consider when opening a futures account. To conduct trades, you must have a minimum amount of collateral in your account. The greater the trade’s value, the higher the margin required by the broker or exchange to execute the trade. It’s worth noting that margin requirements range between exchanges and brokerages.
Benefits of futures trading
There are several ways in which investors can use the concept of futures trading to their benefit. Investors who hold digital assets could reduce the impact of a price drop by taking a short future position on the asset at the same time. If the price decreases, the short position will compensate for the loss by bringing in more money.
Cryptocurrency futures trading allows for actual speculation because traders can use futures contracts to make their thoughts known in the market. Do you believe the price of Bitcoin will skyrocket? Increase your returns by going extra long on futures. Do you believe LTC will perish? Get short on Litecoin Futures and put your money where your mouth is on Delta Exchange.
With speculation comes stability, as long-term market perspectives become increasingly important. Whether you’re a Bitcoin miner with predictable Bitcoin flows or a Bitcoin ATM operator with inventory to maintain, futures allow cryptocurrency merchants to smooth out their risk while focusing on their primary business.
The transaction does not involve any physical currency exchange. As a result, trading bitcoin futures removes the risk of holding a volatile asset class with large price swings. Furthermore, keeping digital assets in custody can be costly and add to the overall costs. Lastly, futures contracts come with position and price restrictions, which enable investors to limit their risk exposure to a specific asset class.
So what are you waiting for? Get started with futures trading on Delta Exchange and enjoy margins up to 100x on perpetual swaps.
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