Expiration Futures: Strategies for successful cryptocurrency trading
The world of cryptocurrency trading can be volatile and unpredictable. With the growth of cryptocurrencies such as Bitcoin, Ethereum and others, the market has become more and more crowded. An aspect of this market that is often overlooked is the expiration of the futures. In this article, we will explore the importance of Futures expiration in cryptocurrency trading and provide strategies for successful traders to sail on this critical component of their investment strategy.
What is the expiration of futures?
Futures expiration refers to the point where a traded contract reaches its expiration date. At this moment, the basic asset (in this case, cryptocurrents) will no longer be traded at the exchange where it was initially listed. This can have significant implications for traders, because futures contracts can offer lever and potential profits.
Why is it important to expire futures in cryptocurrency trading?
Futures expiration can create opportunities for traders to take advantage of price movements before being fully done. For example, if a trader has bought a cryptocurrency contract to 10,000 units per unit, but the market price falls to 8,500 units before expiration, it may be able to sell their contract and recover some of the initial investments. In contrast, if a trader sells a futures contract with an expiration date in the future, it may be obliged to keep the asset until this date, potentially blocking the profits.
Strategies for successful Futures Expiration
Expiration
While trading at expiration can be a high risk strategy, there are several strategies that successful traders use to navigate in this critical component of their investment strategy. Here are some key strategies to consider:
- Position size : Position dimensioning refers to the value of the capital allocated to each trade or contract. A well -sized position allows more flexibility and reduces the risk in case of losses. However, it also means that a higher proportion of your capital is at stake, so make sure only a reasonable portion of your general portfolio.
- Risk management
: Risk management refers to the process of identifying the potential risks associated with the expiration and to taking measures to mitigate them. This may include coverage strategies, stop-bloss commands or other techniques that help limit losses.
- Technical analysis : Technical analysis is the study of market price movements and models. Analyzing graphics and trends, traders can obtain information about potential opportunities and risks associated with Futures expiration trading.
- Sent of market : The market feeling refers to the general market tone or attitude towards a particular asset. Traders who are aware of the market feeling can use it to their advantage when they decide whether they will trade with expiration.
- Diversification : Diversification is the practice of spreading investments on different markets and active. By diversifying your portfolio, you reduce your exposure to any asset or market, which makes it more difficult for compound losses.
Popular trading strategies for Futures Expiration
Here are some folk trading strategies that can be used together with Futures Expiration:
- The following tendency : The trend tracking involves identifying the direction of a trend and positioning accordingly. This strategy can be applied to both long and short transactions.
- Scalping : Scaling involves taking several small transactions throughout the day, in order to take advantage of low price movements. This strategy requires high levels of market knowledge and fast reaction times.
- News based tradings : News-based trading involves the use of news events as a trigger to enter or go out. This can be applied to both long and short transactions.