Crypto futures trading denotes a trading modality entailing the acquisition and disposition of futures agreements premised on digital currencies. These futures contracts, which embody financial covenants, bind the contracting parties to either vend or procure a given digital currency at an appointed date and price in the future.
In futures trading, traders indulge in conjecture regarding the oscillations in the value of digital currencies, sans actually owning the fundamental assets. These futures agreements facilitate the creation of opportunities for traders to harvest profits, notwithstanding the direction of the crypto market, by embracing long (buy) or short (sell) positions. Now that we have found out the answer to the question, what is futures trading crypto, let’s look for the best long-term crypto futures trading strategy.
Profitable Futures Trading Strategies
If you want to trade crypto futures and receive long-term gains, there is a multitude of vital methods to contemplate:
- Trend following – the identification and pursuit of long-term trends in the crypto market. One can utilize technical analysis indicators such as moving averages, trendlines, and the Relative Strength Index to ascertain trends and enter trades following the prevailing trend. The objective is to seize the brunt of a major trend and stay within the confines of said trade until the trend in question undergoes a reversal.
- Breakout trading necessitates entering trades upon the occurrence of a price breakthrough in a cryptocurrency’s significant level of support or resistance. One can use different breakout strategies, such as trading breakouts from consolidation patterns or breakouts from key chart formations. The idea is to enter trades early in a new trend and ride the price movement for long-term gains.
- Fundamental analysis – the evaluation of a cryptocurrency’s value by examining factors such as the project’s team, technology, adoption, partnerships, and overall market conditions.
- Risk management is paramount for long-term gains in crypto futures trading. Traders must establish stringent risk parameters, such as stop-loss orders to restrict potential losses and utilize proper position sizing techniques to manage their exposure to the market. It is also essential to diversify one’s portfolio and avoid putting all their eggs in one basket.
It is impossible to guarantee a no-loss future trading strategy, for all actions associated with crypto are highly risky and have no guarantee. However, there are various strategies and risk management techniques that traders employ to minimize their losses and increase their chances of profitability.
