Futures drain: Strategies for successful trade in cryptocurrencies
The world of cryptocurrency trading can be volatile and unpredictable. With the advent of cryptocurrencies such as Bitcoin, Ethereum and others, the market has always become overcrowded and more complex. One aspect of this market, which is often overlooked, is Future’s process. In this article, we will examine the importance of the futures process in cryptocurrency trade and offer strategies for successful dealers in order to control this critical component of your investment strategy.
What is futures drain?
Future’s drain refers to the point where a traded contract reaches its expiry date. At this point, the underlying asset (in this case cryptocurrencies) is no longer traded on the stock exchange, where it was originally listed. This can have a significant impact on dealers, since futures can achieve levers and potential profits.
Why is the futures drain important in cryptocurrency trade?
Futures drain can create opportunities for the dealers to use price movements before they are fully realized. For example, if a dealer has bought a cryptocurrency contract with 10,000 units per unit, but the market price drops to 8,500 units before expiring, he may be able to sell his contract and recover part of your initial investments. If a dealer sells a futures contract with an expiry date in the future, it can be recorded on the asset by this date and may lock profits.
Strategies for a successful futures drainage trade
While trading can be a high risk strategy, there are several strategies with which successful dealers navigate this critical component of your investment strategy. Some important strategies must be taken into account here:
- Position size : Position size refers to the amount of the capital that has been assigned to every trade or contract. A good position enables more flexibility and reduces the risk of losses. However, this also means that a larger part of your capital is at stake. Therefore, set up only a reasonable part of your entire portfolio.
- Risk management : Risk management refers to the process of identifying potential risks associated with the trade in departures and take measures to reduce measures. This can include security strategies, stop-loss orders or other techniques that help limit losses.
- Technical analysis : Technical analysis is the examination of price movements and patterns on the market. By analyzing diagrams and trends, retailers can get insights into potential opportunities and risks related to the futures process.
- Market feeling : The feelings of the market refers to the overall tone or the attitude of the market compared to a certain asset. Dealers who are aware of the market mood can be used to make their advantage if they decide whether they should be traded for expiry.
- Diversification
: Diversification is the practice of spreading investments in various markets and assets. By diversifying your portfolio, you reduce your commitment in a certain asset or a specific market, which makes it more difficult for losses.
Popular trading strategies for futures drain
Here are some popular trade strategies that can be used in connection with futures process:
- Trend follows : Trend follows to identify the direction of a trend and position yourself accordingly. This strategy can be applied to both long and short businesses.
- Skalping : The scalping includes taking several small trades during the day to benefit from small price movements. This strategy requires a high degree of market knowledge and fast response times.
- News-based trade : News-based trade includes the use of news events as a trigger for the entry or output of a trade. This can be applied to both long and short businesses.