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EducationalDecember 30, 2020

Your Bitcoin Futures Position Looking Good? What To Keep In Mind

Shubham Goyal
Chief Business Officer
December 30, 2020

Bitcoin Futures history has been very impressive since they were first launched in December 2017 by CBOE (Chicago Board Options Exchange). The exchange allowed users to speculate on the rise or fall of the price of Bitcoin at the time of the Bitcoin Futures expiry and earn profits. Nowadays popular crypto derivatives exchanges like Delta Exchange allow trading in a variety of crypto derivatives, including Bitcoin Futures and options.

The arrival of Bitcoin Futures on the crypto trading scene is regarded as a significant milestone in Bitcoin’s history. Experts claim that it was the sole event responsible for Bitcoin prices reaching an all-time high at the value of $20,000 Just a week after the launch of Bitcoin Futures.

One can say that futures are the most liquid instruments to trade Bitcoin with a daily trading volume average of $5 million. Bitcoin Futures trading scores over Bitcoin trading and comes with multiple benefits, including:

  • Speculators can trade in Bitcoin without actually buying or holding Bitcoin, which might be way beyond their means. Futures allow investors to trade with a basic knowledge of Bitcoin working and market dynamics.
  • Bitcoin Futures help in making the market less volatile by stabilizing Bitcoin prices.
  • Bitcoin Futures provide greater market exposure than other crypto futures to the investors.

For all those new to Bitcoin Futures investing, the obvious question is, “What things to keep in mind while investing in Bitcoin Futures’. Here’s a handy guide for you to ease up those wrinkles as you invest in futures:

Adopt a working strategy

The investors ought to have a detailed understanding of how the crypto derivatives market works. You should be aware of your risk tolerance levels, the tenure and the magnitude of investment before taking your futures position, given the kind of complexities involved.

Prepare a working strategy to avoid guesswork while investing in Bitcoin Futures. Delta makes Bitcoin Futures trading a cakewalk with its detailed Bitcoin Futures guide and highly intuitive and user-friendly trading platform.

The cryptocurrency derivatives exchanges come with their own set of trading terms such as:

  • The amount of leverage
  • Types of settlements
  • Types of contracts

The Bitcoin Futures market has evolved since 2017, and is now more diverse than ever, with regulated exchanges providing the necessary trust and assurance to the investors. So look, think, and then leap.

Decide the long and short of your Futures investment

A Bitcoin Futures contract is a commitment to buy and sell bitcoin at a fixed price in the future. An investor may ‘go long’ or ‘ go short’ with his futures investment to earn profits.

  • If an investor buys a futures contract in the hope that Bitcoin prices will rise in the future, it is called ‘going long’. It is the most used and simplest strategy adopted by Bitcoin Futures traders.
  • If an investor sells a futures contract in the hope that Bitcoin prices will fall in the future, it is called ‘going short’.

A hedger strategically short sells Bitcoin Futures to protect their interest while simultaneously maintaining their Bitcoin holdings. Losses can be offset with the difference in price if the predictions are right.

On the other hand, a speculator takes short positions believing that Bitcoin prices will fall and goes long, believing that the prices would go up. Speculators buy and sell futures to make high returns from the price volatility.

Whereas, some investors might want to acquire Bitcoin Futures to gain exposure to the currency via investing in Bitcoin Futures instead of directly buying them. Decide upon your course of action, keeping in mind the motive of your investment to take profit from both the falling and rising market.

Conducting required market analysis and research

Bitcoin Futures require very high margin requirements. It is therefore important to look at the margin requirements for the trading platform of your choice. The knowledge of margin requirements is essential for new investors as it can impact the risk management style a trader intends to adopt. Other considerations include:

  • The proximity in the relation of futures prices and spot prices.
  • Market liquidity
  • Market trends on trade positioning, i.e., how the other traders go about positioning their future investment.

Accompanied by careful market analysis, it is necessary to study relevant indicators such as risk, technical and fundamental analysis indicators to cushion the volatility in the Bitcoin Futures scene. Close scrutinization of money management and position sizing can be better done via monitoring the expert trader trends and market developments.

Finding a reliable Bitcoin Futures exchange

Bitcoin Futures trading is a matter of trust, as the investors facilitate trade via a third party or a reliable crypto derivatives exchange. There are some considerations to note when you’re choosing the right Bitcoin Futures exchange:

  • The range of contracts, assets, and derivatives available on the platform
  • The trading fees charged and the methods of exchange supported
  • The basic features such as security, interface, etc., of the infrastructure of the exchange
  • Whether the exchange is in sync with your trading requirements

The trading fees include deposit, commission, and withdrawal fees. The amount of fees depends on the methods of transfer and the prevalent exchange rates for fiat currency. Check out the other requisites for a customer-friendly cryptocurrency exchange here.

An innovative derivatives platform like Delta exchange offers up to 100x leverage and the ability to go both long and short while trading in Bitcoin Futures. It provides enterprise-grade security and provides multi-signature wallets to the users. It lets traders trade futures in BTC and USDT at low trading fees. Strengthen your Bitcoin Futures position and launch yourself forward via Bitcoin Futures trading.

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