Understand what BCH futures are and how to use the leverage in futures to amplify your trading gains
Bitcoin Cash futures enable you to take long (you profit when market goes up) and short positions (you profit when market goes down) on BCH. Futures have in-built leverage which acts as a multiplier to your returns. Currently, the following Bitcoin Cash contracts are listed on Delta Exchange.
|Bitcoin Cash Perpetual
Bitcoin Cash (BCH) is the most prominent cryptocurrency in the world. It is a decentralized digital currency that functions without a central bank or single administrator. Peer-to-peer exchange of Bitcoin Cash can happen without the need for intermediaries.
Bitcoin Cash is a cryptocurrency and a payment network. It was created by hard forking the bitcoin blockchain in August 2017. The key technical difference between bitcoin cash and bitcoin is that bitcoin cash allows larger blocks in it blockchain compared to bitcoin. Larger block size means that more transactions can be accommodated in a block, which in turn increases the transaction throughput of the blockchain.
There is also a philosophical difference in the supporters of bitcoin cash and bitcoin. Bitcoin Cash team intends to establish its currency as medium of exchange for commerce. In contrast, Bitcoin backers want it to become a store of value or digital gold.
Bitcoin Cash Futures is an agreement between two parties to buy or sell Bitcoin Cash at a predetermined future date and price. The futures contract derives its value from the underlying cryptocurrency, Bitcoin Cash in this case. Thus the price of a Bitcoin Cash futures contract moves broadly in sync with the price of Bitcoin Cash.
Trading futures is thus an alternative to actually buying or selling the underlying crypto (aka spot trading). In spot trading, you can make profit by buying Bitcoin Cash low and selling it at a high price. This trade however works only in a bull market, i.e. when Bitcoin Cash price is going up. However, in a bear market, there is no trade possible in spot trading. Furthermore, leverage trading is not possible in spot trading.
Trading Bitcoin Cash through futures offers several advantages over spot trading of Bitcoin Cash, namely ability to both long or short and get access to leverage.
You can profit from rising BCH price by going long Bitcoin Cash futures. And, when BCH price is falling, you can make profits by going short. This feature of futures trading enable you to navigate all types of market conditions profitably. Compare this with directly buying Bitcoin Cash. When price is falling, you can either sell your Bitcoin Cash or suffer losses. In spot trading, there is no way of profiting from falling prices.
If you are a HODLer, you can still use futures to mitigate price risk. Say, you hold BCH. You can mitigate the risks you face when Bitcoin Cash is falling by going short BCH futures. In this case, a short futures position acts as a downside protection by effectively locking the $ value of your portfolio without the need for selling your Bitcoin Cash. Judicious use of futures as hedge can make you a better and stronger HODLer.
Leverage enables you to open positions that are bigger than your trading capital. If you can open a position that is 10 times bigger than your trading capital, then you have 10x leverage available to you. The maximum allowed leverage for futures listed on Delta Exchange is as high as 100x. There are two ways of thinking about leverage:
Leverage as capital efficiency driver: For opening a position of a given size, higher the leverage lower the trading capital required. The leverage in spot trading is always 1x, while it is 3-4x in margin trading. This means futures is 20 to 100 times more capital efficient than spot or margin trading.
Leverage as a returns amplifier: Because in a leverage trade position size is greater than the capital deployed, impact of prices moves gets magnified. The return on capital deployed is leverage times the price return. This means that you can amplify your trading gains the effective use of leverage.
If BCH increased from $0 to $0 your return would be equal to:
In-built leverage magnifies impact of BCH price moves on your return on capital.
Long when bullish. Short when bearish. Trade all market conditions profitably.
Deploy the capital freed up by using leverage in other trading opportunities
Low trading fees, tight spreads & deep order books of our BCH contracts increase profitability of your trades
Set TP / SL with your order, Leverage advanced order types and instruments (Options, Interest Rate Swaps) to create hedging strategies
Use professional charts & advanced analysis tools to quickly identify trading opportunities