In this article we will be discussing crypto contract or futures trading and how can we benefit from its features. Futures trading helps you multiply your returns; however, they can be risky. Contract Trading allows you to make a profit daily.
If you think the asset price will increase, you can buy/long the asset contract and close when your target is achieved. Similarly, If you believe the asset price will decrease, you can sell/short the asset contract. This helps you make a profit from both the buy and sell markets.
You can choose from sixteen crypto-asset options such as Bitcoin, Bitcoin Cash, Ethereum, Litecoin, Ripple, EOS, TRON, and more.
Contract/Futures trading is a method of trading assets that allow traders to access a larger sum of capital through leveraging from a broker. In simple terms, contract trading allows traders to borrow capital to open trades with a larger margin to secure a potentially higher profit. Unlike spot trade, what we buy here is not actual bitcoin that we can hodl, what we buy is a bitcoin contract so if you buy lets say $5 worth of bitcoin your actually buying 5 contract because $1 = 1 contract.
Leverage is the use of borrowed funds to increase one's trading position beyond what would be available from their cash balance alone. for example you buy $5 and you leverage it to 5x therefore your position now becomes $25 you actually borrowed $20 from Bityard and when profit sell, the borrowed $20 will be returned and your position + profit all to you. The thing with leverage is that if the price goes up by 1% you actually gain 5% since you leverage it 5x the same goes if you lose 1% that's actually 5% therefore the higher the leverage the higher the profit or lose.
In this image I choose 10% as my TP and 5% as my SL, that is 1:2 risk to reward ratio (R:R) means im risking 5% in exchange for a 10% possible reward as my personal preference and you can change it according to your liking, it means that if the price goes up by 10% it'll automatically exit my position by earning 10%, and if price is down by 5% my position automatically closes down by 5%, the SL is set to avoid further loses which is very important in preserving your portfolio.
So in general as contract/futures trading pose a potential high reward it also pose a high risk so make sure you know how to manage risk and never trade without a stop lose set. And next stop will be about copy trading, how it works , tips and more!
Try Demo Account it helps you to start trading quickly. A demo mode is available, which will help you in getting accustomed to the platform.
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