Crypto Futures Trading For Beginners: Where To Start?

What Is Crypto Futures Trading?

Crypto futures trading differs from spot trading in many ways as it doesn’t require participants to hold any assets to participate. Instead, traders look to buy or sell derivatives contracts, which represent the value of a given crypto at a specific date in the future.

Essentially,  futures trading allows investors to speculate on the future value of a cryptocurrency. Traders can go long to wage on a price advance or go short to anticipate a price drop.

One of the most important benefits of futures trading is the use of leverage. Leverage allows for better capital efficiency as traders do not have to lock up entire amounts of capital. It increases both potential returns and risks, which is why traders must always exercise caution.

5 Steps to Start Trading Futures the Right Way

Futures trading is a challenging endeavor for not only the “fresher” but also experienced traders. It takes plenty of time to understand how the market changes and adjusts over time, how external factors affect the market, the incentives people undertake to participate, and much more.

Therefore, it is crucial to follow a strategic approach to every trade.

1. Find a Trading Methodology

Finding a trading methodology is more than just replicating a highly profitable strategy that was found on YouTube or social media. A trading methodology that works has to be personalized to fit your psychological traits, lifestyle, risk tolerance, and long-term objectives.

To find the optimal fit for yourself, follow these points:

• Identify your trader personality
• Determine your risk tolerance and long-term financial goals
• Define trade parameters that could match your personality
• Evaluate the performance of each parameter and how you deal with them
• Make adjustments if you experience problems

2. Develop a Trading Plan

A trading plan can help you to manage risk better and help improve trading consistency. When developing a trading plan, you must include a detailed layout of how you would enter and exit positions, including entry and exit indicators, position-sizing, and stop-loss placements.

The advantages of having a trading strategy are numerous, ranging from lowering stress throughout the trading day to missing fewer trades. Traders must become more conscious about their trading habits to make highly targeted developments and treat trading seriously.

3. Proper Risk Management

The most important thing about trading is risk management. It begins by simply setting bounds for what you deem is acceptable or unacceptable to lose in a trade.

When trading futures, each dollar should be treated as if it is worth 100x its actual value. If your account is worth $1,000, you should be highly averse to losing more than $10.

Having a long-term perspective requires traders to approach each trade with a clear strategy. Winning in small doses over time is vital to building a proper account.

Risk management strategies can help protect capital, enable realistic expectations, and avoid letting emotions run your trades.

4. Trade Responsibly

Emotional and compulsive trading are considered forms of gambling behavior that can demise a trading career. There are multiple ways to mitigate these psychological traits, such as minimizing leverage, decreasing the number of traders performed on a given period, setting conservative goals and targets, and never trading with money you cannot afford to lose.

Losses can stack up quickly and damage your capital, which is why letting losses go and avoiding “lucky runs'' are responsible approaches to futures trading.

5. Continuous Education

Something about Bitcoin, or cryptocurrencies in general, is that it represents a new asset class so people are talking about it and working on making improvements every day. This industry is constantly evolving, which is what makes it so exciting.

Keeping up with the blockchain industry and constantly looking for ways to improve your trading skils is necessary to remain on the edge of success. Education will always help create more decisive insights into the subsequent market movements, allowing you to plan for what’s to come.

Position Exchange

Position Exchange offers DPTP version 2 with improved functions to support users at our best like a Centralized Exchange (CEX) platform.

• User-friendly interface
• Lower gas fee
• Speedy transaction process
• Creating a futures exchange that enables users to profit quickly and leverage their investment for greater gains
• Constructing an on-chain public exchange that is transparent and allows users to check all of their transactions
• Granting users the ability to place orders directly from their DeFi wallets.