As 2020 has seen a significant maturation of the digital assets market, there is no more ideal time to start exploring the bigger opportunities new trading tools can provide.
It doesn’t matter if you are an experienced Bitcoin trader or a newbie willing to dip your toes in the crypto waters, it’s worth paying attention to Bitcoin futures.
Are you tired of watching your profit get eaten away by high commission fees or worrying about your funds being kept on vulnerable exchanges? Then futures trading for Bitcoin may be just what you’re looking for.
Why turning to Bitcoin futures trading is a smart move
The most fascinating thing about BTC futures is that they give both sides settling an agreement the ability to minimize losses arising from price fluctuations. That’s what has made this style of trading quite popular in the highly volatile crypto market. But, aside from volatility, there’s another issue that has deterred many from getting involved in crypto, namely, its lack of regulatory clarity. Supervised by the Commodity Futures Trading Commission (CFTC), crypto futures contracts bring trust to virtual assets, not only for retail investors but also for institutions. This, in turn, adds greater liquidity to BTC, increases its price stability and reduces possible slippages. The boost in liquidity is beneficial to the health of the industry and puts it in a better position from the point of view of mass adoption.
However, contributing to the greater good of the crypto industry as a whole is not the sole reason why you should look into BTC futures. Altruism aside, there are a number of potential personal and financial advantages in trading Bitcoin futures as opposed to trading the currency outright.
Firstly, there is no need to store or transfer your crypto, which means you won’t have to worry about your funds getting stolen, hacked or going missing. In addition, there is no longer a great entrance threshold for traders of traditional assets to get involved with crypto trading, as Bitcoin futures work in much the same way as their traditional counterparts.
Secondly, opening a futures position incurs much lower charges — sometimes even no charges at all — then opening a regular position. This is a must for day traders, because regular commission fees often amount to large figures that can lay waste to your profit margin. To avoid these kinds of hang ups so prevalent in the industry, the savvy move is to head over to Digitex BTC Futures exchange where you can enjoy fee-free operations like buying DGTX tokens from our Digitex Treasury.
What’s more, you’re more likely to see equitable prices on futures markets owing to the advanced futures calculating algorithms that take into account an index of prices across multiple exchanges. With the result of these calculations, the so-called “mark price,” it’s quite hard to manipulate the value of underlying assets, and, consequently, the possibility of unjust liquidations is rather small.
Higher level strategizing with BTC futures is very easy
One more exciting bonus of Bitcoin futures contracts is that they make some trading strategies, like using leverage, shorting and scalping, more affordable and understandable. It’s no secret that cryptocurrencies periodically go through bull and bear cycles — what trader wouldn’t want to make the most of each?
One of the more popular ways of capitalizing on these cycles is by trading on leverage. In leverage trading a trader does not have to cover the entire purchase price of a position, using instead funds borrowed from an exchange or a lender for that purpose. Of course, there’s a collateral that needs to be paid, but if you do everything right, you will be able to significantly amplify your capital gains.
While most people unfamiliar with trading perhaps assume that futures speculation is a pursuit exclusive to bull markets, the truth is that it can be done rewardingly in bear markets as well. In this case, BTC futures traders buy contracts to simply sell blocks of Bitcoin they don’t own themselves at a settled price in the future. It’s really hard to pull off with ordinary cryptocurrencies, stocks or ETFs. However, practicing short-term selling is crucial in terms of learning how to make money even when the prices keep falling, and this is where futures can really open up trading for you.
Beyond shorting, Bitcoin futures trading has opened up fertile territory for looking to scalp. Scalping, when it is done successfully, is a labor intensive technique that can lead to sustainable, long-term profit margins. The trick is having an almost zen-like approach to trading wherein emotions hold no sway. A trader must be able to exit a position as soon as possible, and to cut bait without looking back. While scalping takes time to master, it is an essential tool in the futures trader’s arsenal.
Experts often caution that trading BTC futures is dangerous for amateurs, but in fact the concept is clear enough: you buy low and then sell high. Your success depends entirely upon your ability to watch and react to the price action. When practiced responsibly, futures trading can open up new trading horizons and multiply profit margins, while contributing positively to the development of the cryptocurrency industry.