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cryptocurrency: Futures Trading 101 for beginners
The world of cryptocurrency has exploded in recent years, and the value of Bitcoin and other digital currencies has increased rapidly to unprecedented levels. However, apart from the headers and market variability, there is a more refined aspect that is worth exploring: Futures trade.
Futures Trading is an advanced financial strategy, which includes buying or selling assets, such as cryptocurrencies, goods or indexes, at a certain price at a specified period in the future. This article delves into the basics of the freak of cryptocurrency Futures, its benefits and risk and will provide tips for beginners who want to start.
What are Futures contracts with cryptocurrencies?
Futures in cryptocurrencies are contracts between the parties for the purchase or sale of base assets (in this case Bitcoin) at a certain price at a specified period in the future. The most famous example is Chicago Mercantile Exchange (CME), which offers various futures contracts in cryptocurrency, including Bitcoin and Gold Futures.
Why trade cryptocurrencies or?
Commercial cryptocurrencies can offer several benefits:
- liquidity
: As the largest digital currency market, there is a huge network of buyers and sellers ready to trade at a given moment.
- Risk management : By buying or selling Futures contracts, you can protect yourself against price variability and potential losses due to changes in market conditions.
- Diversification : You can diversify the investment portfolio, including Futures contracts with cryptocurrencies.
key concepts
Before immersing into the world of cryptocurrencies trading Futures, it is necessary to understand the basic concepts:
- expiration dates : Futures contracts have specific expiry dates, after which it expires worthless, unless you meet certain conditions.
- Margin requirements : You need to deposit a margin (or “margin”) to cover potential losses or profits in your transactions.
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Types of Cryptocurrency term contracts
Several types of Futures contracts are available in cryptocurrencies:
- Physical goods : Agreements that oblige you to buy or sell a certain amount of basic assets (e.g. Bitcoin Futures).
- Agreements based on the index : Contracts to follow an index such as the S&P 500, which can be used for security purposes.
- ** Spot market agreements: contracts that allow you to buy or sell assets at the current market price.
benefits and risk
Benefits:
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2.
Risk:
- Market variability : Prices of basic assets may change quickly, which leads to significant losses if they are not properly managed.
- Risk of liquidity : Limited commercial activity may result in higher bid-ak spreads and a reduction in liquidity for your transactions.
- Risk of a contractor : You can be exposed to the risk of a contractor when using a broker or replacing third parties.
Tips for beginners
If you are new in the Futures trade in cryptocurrency, here are some tips to start:
- Educate yourself : Before investing, learn about the basics of cryptocurrency and future markets.
- Start from a small thing : Start with a small position and gradually increase it when you gain experience and confidence.
- Set clear goals : Define your investment goals and risk tolerance before cryptocurrency trading.
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