Bitcoin futures trading strategy
Nov 01, · “Going long” is arguably the most used and simplest strategy in the bitcoin futures market. If you think the price of bitcoin is going to rise you buy a futures contract – also known as going long. You can buy futures that expire soon, say in a month or two, or futures that expire far in the future, . Jan 30, · Like a futures contract for a commodity or stock index, Bitcoin futures allow investors to speculate on the future price of Bitcoin. The Chicago Mercantile Exchange (CME) . Learning the most popular Bitcoin Futures trading strategies in use today can be a smart way to improve your positioning and overall crypto skill level. Savvy investors understand that no one can predict with % accuracy the turns the market will take. However, there are some methods traders use to reduce their risk and improve their profits.
Bitcoin futures trading strategyHow To Invest In Bitcoin Futures
Several platforms, financial institutions, and various cryptocurrency exchanges have signaled to launch Bitcoin Futures on their platform.
CBOE is one of the largest cryptocurrency futures exchange platforms in the world. It is also the first exchange platform to launch Bitcoin Futures. Bitmex is a cryptocurrency exchange that offers Bitcoin Futures trading to everyone except to the U. TC Ameritrade is one of the largest brokerage firms in the world which offers Bitcoin Futures Trading. It is also a designated self-regulatory organization registered with the NFA. Along with these platforms, there are various other platforms as well like, OKEx, Nasdaq, Bakkt, and many others.
Also, the Bitcoin Futures has gained a lot of support from both the regulators and investors. But always remember that for futures trading, there is a winner and a loser.
There may be some situations where you could end up with less money than you started with, so you should always be ready to take the risks.
If you are an experienced trader, then there are chances that Bitcoin Futures can add an interesting twist to your cryptocurrency investment journey. Renuka is an active blogger and guest writer at Bitcoinik. In her experience, she has worked as a crypto-journalist and has also contributed to the blockchain, cryptocurrency, and fintech industries.
You can contact her at Linkedin. How to trade Bitcoin Futures? Crypto Education exchange news. Last updated Jul 8, What if the price of Bitcoin increases even after you sell the asset? What to do in such a situation? Yes, it is possible! In the case of financial assets like Bitcoin, Bitcoin Futures can be used. What are Bitcoin Futures? Related Posts. Your Money. Personal Finance.
Your Practice. Popular Courses. Bitcoin Guide to Bitcoin. Cryptocurrency Bitcoin. What Are Bitcoin Futures? Key Takeaways: As with a stock or commodities futures, Bitcoin futures allow investors to speculate on the future price of Bitcoin. CME offers monthly Bitcoin futures for cash settlement. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.
You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Related Articles. Partner Links. Related Terms Bitcoin Bitcoin is a digital or virtual currency created in that uses peer-to-peer technology to facilitate instant payments.
It is a scarce resource with there only ever being 21 million in existence, it has low transaction fees which are often taken into consideration by certain trading platforms, and probably — most importantly, Bitcoin is the best performing asset of the last decade by a considerable margin.
This strategy is arguably the easiest , most common, and highly prized Bitcoin Trading strategy. The other big advantage of this method of trading is that it is incredibly simple. There are of course some Cons that come with this strategy though. It is a strategy that comes with risk.
Because the Bitcoin market price is constantly moving, one day Bitcoin price is going up , the next day bitcoin price can drop. If you decide to buy and hold Bitcoin at a certain price point, the price can drop significantly from there and you can lose as much as 80 percent of your investment. One of the more exciting Bitcoin trading strategies that have become quite popular in recent times is Bitcoin Margin trading.
This form of trading offers huge profitability margins as it involves using borrowed funds to place larger trades on Bitcoin. This, in effect, means that a person can double, triple, or more, their initial investment in a single trade. Margin trading is also known as leveraged trading as a person borrows funds — usually from a cryptocurrency exchange, they are trading on — to leverage their trades for a higher profit margin. For example, some platforms offer trading of meaning that if you want to trade with 1 BTC, you are able to borrow 2 more BTC for the same trade.
Then, if that trade is successful, your profit is then three-times bigger. The biggest Pro of this strategy is the massive amount of profit that can be made in a single trade.
The Con of this type of trading is that the margin trading can go the other way and lead to large losses as well. Trade Bitcoin with Leverage. This trading strategy has become more and more popular in recent times, and that is obvious by the amount of money that is seen in the Bitcoin futures market, and the fact that there are more institutional investment firms now offering Bitcoin Futures Trading options. Futures Trading involves entering into a contract with a trading platform — that has a set value — and taking a speculative prediction on the price of the digital asset.
The contract thus sets the future price of the asset which needs to be honoured regardless of how the market has moved. The Pros of this Bitcoin trading strategy is that it also offers a hedge against a potentially falling Bitcoin price. This means that if the price does fall, you get to sell your Bitcoin at the higher price you originally bought the Bitcoin contract for. Another big advantage in this form of trading is that this has become a regulated trading market with the likes of CME and Bakkt — two institutional investment platforms — offering the service.
But even cryptocurrency trading platforms and exchanges are getting regulated. Another very popular trading strategy that has become especially attractive when it comes to the Bitcoin market is Day Trading. Many people want to learn how to Day Trade Bitcoin, but this form of trading basically requires a person to keep a sharp eye on the continuously fluctuating Bitcoin price and looking to buy when it is low and sell when it is higher, to take profit.