If care isn’t taken, you jumped into trading as a result of the pump in dogecoin, Bitcoin mooning, or a p2p opportunity. As a crypto trader, you get to learn about the power of futures trading. The power of this trading margin is something you can use to turn $1000 into $100000 within a short period. You might have ventured into Forex with the same mentality you had around spot trading. You forgot it’s a different ball game, and you needed proper training to sharpen your trading strategies.
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What you get is often mistakes, and losses, this could be losing money that you earned as a beginning crypto trader in a spot trading zone. Either way, you could be one of those crypto traders who buy the bull, instead of the bear, without realizing it. And you end up losing a huge sum of money which makes you unhappy, as compared to when you had your p2p trading skills.
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Essentially, your mistake is that you have no idea how to manage a bear market for your profit. Therefore, to become a successful and profitable crypto trader, you need adequate knowledge. You have to be fully equipped for the various market situations you’ll encounter as you trade. The overall truth is that you can make money in any market, with adequate knowledge. Learning how to swing the market and make a profit as a crypto trader is of the essence.
As a crypto trader, this is the most basic trading strategy that you can make. It revolves around buying crypto coins, holding them until a bull market shows up. Then, you sell them for a profit or other altcoins that are likely to perform well in the future. If you are a new crypto trader, this is essentially the first trading you’ll be conversant with.
This entails using funds provided by a third party to trade assets. As a crypto trader, you’ll have access to a greater sum of capital. And it will allow you to leverage your position, and realize a larger profit, on successful trades. This makes margin trading popular even in the foreign exchange market because trading results can be expanded.
You might discover that the crypto market has high volatility, and you wouldn’t need leverage. This is because you can still make profits, with a huge amount of money/capital. You don’t necessarily need leverage here because you might find low cap coins that would go up to 10X, 100X, etc.
All advanced crypto traders know that this is the real deal because you can trade up to 125X. This is raw in the sense that you are well aware that higher risks mean higher rewards. You can use leverage by borrowing funds from other traders or exchanges to trade on higher margins. (margins, are collaterals placed to trade with leverage).
read also: Foreign Exchange Market for beginners.
Therefore, as a crypto trader, you can trade with higher leverage which results in high profits, and of course, high risks. Also, you might have known that futures are a different market from the spot market. The reason is with spot, you are buying and selling the actual assets. With futures trading, you are trading the derivative of the asset and not the actual assets.
You can also use futures to go shorts as well as speculate for greater profits. The former is done by hedging your long position, especially in a bear market.
Spot or futures?
A crypto trader chooses either of the trading strategies with regards to a lot of factors. For you, you need to consider your reasons, risk appetite, trading capital, experience, and strategy.
If you are a new crypto trader, you should stay away from futures trading until you’ve gained the necessary training and knowledge. Instead of losing money trying to figure your way out, stick to spot trading, and learn about the futures in the background. However, if you are already experiencing with futures on Forex trading, then, it will come easily to you on cryptocurrency. All you have to do is to familiarize yourself with the UI on crypto exchanges, and other stuff.