The crypto perpetual futures market is a relatively new and unexplored trading arena. It is also an exciting one with great potential to generate some serious profits. While it may seem a bit complicated at first, once you have a firm grasp of the underlying principles, it will become second nature. The benefits of this trading strategy are numerous and far-reaching, especially if you can harness it to its full potential.
Crypto perpetual futures can be a lucrative tool for any trader who is looking to diversify their portfolio. To help you get started, in this article we cover everything you need to know about crypto perpetual futures. We also give you an important list of advice that will help you gain more insight and be more successful with your own trading.
- Using crypto futures, investors can forecast the price of cryptocurrencies.
- As cryptos are known for their volatile price changes, investing in cryptocurrency futures is risky.
- You can trade cryptocurrencies at approved brokerages for trading in futures and options.
- Futures provide exposure to various assets and allow for hedging and risk management.
- Traders could place short bets in anticipation of a downside move and profit from it. This case would not be feasible if one could only buy and sell spot stocks.
- Traders can use leverage or borrow money from liquidity providers to execute massive trades and profit more significantly. Any asset pair tends to have more liquidity when traded in futures markets.
The crypto market post the LUNA crash has recovered significantly and is heading to an expected boom with good reason! Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and control the creation of new units. Because cryptocurrencies are decentralized, no central authority can tamp down on their value or regulate their use.
This has made them a popular choice for investors, traders, and companies who want to create their cryptocurrencies. However, because cryptocurrencies are still relatively new and complex, not everyone understands how they work. That's where crypto perpetual futures trading comes in - it allows you to trade cryptocurrencies without owning them.
By trading futures contracts, you can hedge your bets and ensure that you have a position in whichever cryptocurrency fares best over time. To get started with crypto perpetual futures trading, read on!
What Are Crypto Perpetual Futures?
Cryptocurrency perpetual futures allow traders to profit from the price movements of cryptocurrencies with no expiration date. Perpetual futures are a type of derivative contract that allows investors to take exposure to prices of crypto assets without purchasing them at the time of market entry.
Simply put, a perpetual future is an agreement between two parties regarding the future performance of an underlying asset and its cash settlement on a specific date in the future, even if it's never traded again.
How Does Crypto Perpetual Futures Trading Work
A perpetual futures contract is an agreement to buy or sell an asset at a predetermined future date. This is different from a standard futures contract which is an agreement to buy or sell a specified amount of an asset on a specific date at a specific price.
The main advantage of perpetual contracts is that the trader does not have to adjust his margin according to the change in the currency value, unlike standard futures contracts, where large fluctuations in price will result in margin calls. It's a straightforward process that you can get started immediately.
Let us take a look at the best crypto pairs for perpetual futures trading and what makes these crypto assets so lucrative.
Best Crypto Assets For Perpetual Futures Trading
Some of the most popular and valued futures contracts include bitcoin, ethereum, solana and Doge.
Bitcoin (BTC) is the most well-known cryptocurrency and is often referred to as the "gold" of the crypto world. With a market cap of $392 billion, it's used by hundreds of thousands worldwide daily. Bitcoin is versatile and can send or receive money, pay for goods and services, or trade with other cryptocurrencies.
Ethereum (ETH) - Ethereum is a newer and more versatile cryptocurrency created in 2015. It's becoming increasingly popular as it has numerous use cases, including sending money and creating smart contracts. With the upcoming merge next month, Ethereum is expected to scale TPS through-put and be a more secure and active layer-1 solution. Ethereum's market cap is $194 billion.
The third project on the list of the most significant crypto perpetual investments in 2022 is Solana. Frequently referred to as the "Ethereum Killer", SOL can manage more than 65,000 TPS (Transactions per Second), whereas Ethereum can only handle 16 TPS. Trading Solana perpetuity can bring in good rewards faster.
It could develop into one of the most distinctive performing tokens in the cryptocurrency market with one of the most effective blockchains on the network if Solana's team works to increase the stability of the blockchain. Solana's price projections indicate that the SOL is likely to increase by more than 1550% over the next five years. It has a market capitalization of $11.5 billion.
It was only a few years ago that Doge gained popularity and has been one of the significant crypto assets to be traded in terms of volume. The perpetual contract to buy or sell Dogecoin at a predetermined price and date in the future works the same as in other assets.
The underlying cryptocurrency, in this case Dogecoin, gives the futures contract its value. As a result, the price of a Dogecoin futures contract generally follows the price of Dogecoin. Doge has a market capitalization of $8 billion.
Tips To Effectively Trade Perpetual Futures
Be careful when you trade cryptocurrencies. You never know when the market will go up or down. You can lose a lot of money if you are not careful. You must be very smart and disciplined if you want to trade in this market. Here are a few things you should keep in mind before you trade in perpetual futures:
- If you want to trade successfully, you need to be able to evaluate the market quickly. There are a lot of indicators to help you do this. The most popular are moving average, Bollinger bands, MACD, RSI, and Stochastic. There are many strategies that you can use when you use these indicators.
- You can also make use of econometrics and technical analysis. Econometrics helps you find the best time to enter and exit a specific market or asset to maximize your profits. Technical analysis is very similar to econometrics. It uses charts and graphs to determine the best time to enter and exit a specific market or asset.
- Trading on margin, or trading with leverage, can be risky. You are borrowing money from your broker to increase your profits. Unfortunately, you can also lose more money than you put into these trades. You can lose more than 100% of your investment if the market moves against you.
- If you want to trade in volatile markets like cryptocurrencies, it is not a good idea to trade with leverage at all. It is better to trade using only cash so that you can manage your losses if you have to.
Perpetual Futures Terms
Along with these general tips, you should also be aware of the broader yet crucial trading terms.
When buying futures, you are effectively betting on the market price of the underlying asset reaching or exceeding your purchase price by that date. The buyer of the contract assumes all risks associated with not meeting these settlement criteria - in other words. They're risking being unable to liquidate their position at what they paid for it.
Unlike spot markets, buyers and sellers can meet as soon as possible to liquidate their positions without any risk involved. Futures contracts also enable hedgers and speculators to engage in market-making activities.
Regarding investing in the commodities market, futures contracts are a vital tool. They allow hedgers - risk-averse investors - to lock in profits without exposing themselves to risks at the outset. Futures contracts are also one of the most important instruments used in modern finance and trading; they underpin billions of dollars worth of transactions daily!
The funding rate is how much buyers and sellers agree to borrow before implementing a contract. It's essential to know whether or not futures contracts will be completed on time, as both sides need peace of mind that they won't have to back out at the last minute because there isn't enough liquidity available for trade.
Mark Price is the price at which a futures contract will be settled. It's important to know this as it can determine your profits or losses when trading futures contracts. You can trade futures contracts on various markets based on commodities (e.g., gold, silver, etc.).
To make profitable trades, you need to predict market movements and take advantage of them. The marked price is what determines the settlement value of the contract and is determined by supply and demand factors in the marketplace.
It's never too late to start making money with crypto futures trading - as long as you are patient and you understand the market dynamics. Regardless of the price at any given time, when prices move up and down, profit opportunities are available. To be successful with crypto futures trading, it's essential to have a good understanding of PNL - Profit & Loss.
This will help you stay disciplined in your trading regimen by knowing your limit for each trade and sticking to it religiously. Also essential is hedging your bets by buying and selling contracts with different expiry dates - this helps protect yourself from potential losses in case the market goes against you unexpectedly.
Auto-deleveraging is a term used to describe the process of automatically liquidating or reducing one's position in security without having to take any action on one's part. This derivative product carries high levels of risk and volatility, which makes it ideal for those who want to gamble but don't want to put their money at risk. If the underlying asset's price goes down, the holder loses money - this is also true if it goes up!
Choosing The Best Crypto Perpetual Futures Trading Platform
The trading volume for perpetual swaps is currently 180 billion, with a significant part of this volume being accounted for by derivative contracts with coin and USDT margins. Because perpetual contracts allow for the indefinite holding of positions, they are better suited to speculative bitcoin traders than futures contracts.
You can quickly convert your trading expenses into investments with user-friendly crypto trading platforms like C-Trade. All thanks to its highly welcoming trading ecology, which provides promotional features and a wide range of awards and bonuses. Additionally, it allows you to trade perpetual crypto swaps and futures contracts of well-known crypto assets.
C-Trade has an unlimited supply of Bitcoin and 150x leverage. The platform also supports trading in bitcoin and ether. Compared to rivals, C-Trade stands out thanks to its ability to manage 10 million TPS. What else do you need?
The exchange platform also employs machine learning to detect manipulation to protect your investments. If you are interested in trading bitcoin derivatives on a C-Trade platform, now is the perfect moment to start.
To Sum it Up
- Cryptocurrencies are a new and exciting way to make money. By trading futures contracts, you can make money over time by investing in cryptocurrencies.
- There are three main types of futures contracts - contract for difference (CFD), spread betting, and margin trading.
- CFDs offer the highest returns but require more risk than other options.
- Spread betting allows you to trade with smaller amounts of capital, which is ideal if you're new to crypto trading.
- Regardless of your choice, do your research first to ensure you're making the right decision. It's also important to be aware of the risks involved with crypto trading, so read our complete guide to crypto futures trading to learn more.
Crypto perpetual futures trading is a unique and exciting market that offers investors the opportunity to make long-term profits. Before you get started, make sure you do your research. This will help you understand the contract terms and conditions and the risks involved.
It's also essential to use a reputable platform - one with good security features - when trading. Be prepared for sudden price moves, and always have an exit strategy planned in an emergency.
C-Trade offers Futures Contracts and Crypto Perpetual Swaps for the world's most used crypto assets. In addition, it allows traders to trade and earn thanks to its extensive bonus programs and marketing initiatives.
Are you considering entering the world of cryptocurrency derivatives? Then don't wait. Join the C-trade Club by signing up today and following their Twitter and Telegram for the latest developments in the crypto world, platform announcements, bonuses, etc.
Disclaimer: This content is not financial advice, please do your own research before investing.