Understanding cryptocurrency – a guide for beginners after trading in the Futures contract
In recent years, the world of finance has witnessed a significant increase in the popularity of cryptocurrencies. From Bitcoin and Ethereum to Dogecoin and Litecoin, these digital currencies have gained huge adhesion among investors and traders around the world. However, for those who are new on the cryptographic market, navigating the complex and rapidly developing landscape can be discouraging.
One of the aspects of cryptocurrency trading, which is often overlooked, is the Futures trade. Futures contracts allow traders to focus on cryptocurrency prices in the future, ensuring a way of risk management, while participating in market variability.
In this article, we will delve into the world of Futures trade cryptocurrencies, examining its benefits, risk and necessary concepts to start.
What are Futures contracts with cryptocurrencies?
Futures contracts in cryptocurrencies are contracts between two parties for the purchase or sale of cryptocurrencies at a certain price at a specified period in the future. These contracts can be traded, among others, on various stock exchanges, such as CME (Chicago Mercantile Exchange) and EEX (European).
The key features of the future of cryptocurrencies include:
- speculative trade
: Futures contracts are designed for speculative purposes, enabling traders to bet on price movements.
- prices : Futures contracts prices are determined by market forces such as supply and demand.
- Delivery or cash settlement : Traders may decide to deliver the contract (i.e. physically take over basic assets) or take into account cash.
Benefits of trade in Futures contracts
Trade Futures offers several benefits:
- Risk management
: Protecting in relation to price fluctuations, traders can minimize their losses.
- lever : Futures contracts offer a higher potential return on investment compared to traditional shares and bonds.
- Diversification : Trading Futures allows traders to diversify their wallets with many assets.
Risk of Futures contract trading
While Futures trade offers many benefits, it also has a significant risk:
- Market variability : cryptocurrency prices may change quickly, which leads to significant losses if they are not properly managed.
- Limitations of the lever : Excessive lever can strengthen both profits and losses, which making difficult risk management.
3.
Understanding of cryptocurrency futures contracts
To succeed in the Futures trade in cryptocurrency, you must understand the basic concepts:
1.
- Prices of strokes : price at which the contract may be performed (e.g. buying or sale).
- Time until the term : The duration of the contract remains open.
First steps with trade in cryptocurrency
To start, follow the following steps:
1.
- study and understand contracts : Familiarize yourself with the types of available contracts and their features.
- Set risk management strategies : Develop a risk management plan and setting levels.
- Start low performance and monitor : Start by testing your strategy at the demonstration account before the risk of real money.
Application
Trade of Futures in cryptocurrencies offers great potential to traders with proper knowledge and approach. Understanding the basics of futures contracts in cryptocurrency, risk management and informing about market conditions, you can move in this complex space and potentially derive profits from its variability.
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