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Understanding of Futures Trading mechanics in cryptocurrency
The world of cryptocurrencies has exploded in recent years, with the prices that have risen to the stars and precipitate at a quick pace. One of the most popular forms of negotiation of these digital activities is Trading Futures, which allows people to bet on their price movements before they occur. But what exactly are cryptocurrencies and how do they work? In this article, we will break down the mechanics of the trading of future cryptocurrency, including key concepts, strategies and risks.
What is a cryptocurrency?
A cryptocurrency is a digital or virtual currency that uses encryption for security and is decentralized, which means that it is not controlled by any government or institution. The best -known cryptocurrencies are Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC). These digital currencies operate on a peer-to-peer network, allowing users to send and receive funds without the need for intermediaries.
How does Futures Trading work in cryptocurrency?
Trading Futures involves speculation at the price of a cryptocurrency before it is actually exchanged. There are two main types of future contracts: spot and forward. The spot contracts provide for the purchase or sale of cryptocurrencies to their current market prices, while the term contracts provide for the creation of a future contract to purchase or sell a currency at a predetermined price.
Key concepts in Futures Trading on cryptocurrency
- MARKET HOURS : In the cryptocurrency trade, there are two main market hours: the US market (10:00 et) and the Tokyo market (20:00 ET). This is because important exchanges such as the New York Stock Exchange (Nyse), Nasdaq and Binance are based in the United States.
2 They help to combine buyers and sellers by providing a trading platform.
- Order types : There are two main types of order types: market orders (buy/sale at the current market price) and limits (set a specific price). Market orders immediately perform, while the limit orders can be performed until the market reaches the specified price.
- Margin requirements : the margin requirements vary according to the exchange and balance of the trader account. Some exchanges require traders to maintain a margin ratio of 2: 1 or more.
Strategies in Futures Trading on cryptocurrency
- Trading of one day : daytime trading implies the purchase and sale of cryptocurrencies within a single day, trying to profit from the price fluctuations.
- Swing Trading : Trading Swing involves detention positions for a longer period, generally several days or weeks, with the aim of profit from trends or models.
- Position trading : position trading implies the purchase and possession of cryptocurrencies for a prolonged period, exploiting their long -term trends.
- Scaling
: the boost implies the creation of smaller operations in a short period, trying to profit from small price movements.
Risks in Futures Trading on cryptocurrency
- Mercato volatility : cryptocurrency prices can flow rapidly and unpredictably, making it difficult for operators to provide market movements.
- Risk of liquidity : liquidity suppliers may not always be able to fill the purchase orders or sell to the desired price, leading to the risk of liquidity.
- The risk of losing money : Trading Futures implies risking capital, since losses can quickly add and erode the balance of a trader account.
Tips for beginners
- Educating yourself
: Discover the cryptocurrency markets, trading strategies and risks before entering the market.
- Setting realistic expectations : understanding that cryptocurrencies are subject to significant price oscillations and do not guarantee returns.
- Start with a small account : starts with a small account to practice trading without risking too much capital.