Strategies for successful crypto futures trading is what this article is all about. If you trade crypto in any form, I’m sure you’ve heard of, or maybe even tried futures. Then again, if you’re like 99% of the traders, you’ve probably lost money. That’s fine, you aren’t alone.
Here are some of the best strategies that can help you maximise your profits. Of course, none of this is a guarantee, just like getting a degree doesn’t guarantee a job. However, you’ll be better equipped to trade futures by the end of this piece than you are now.
Also, this isn’t a promotional piece that means you wouldn’t be seeing “buy this/ buy that” anywhere here. This is as educational a piece as it can be.
Table of Contents
7 Strategies for successful crypto futures trading
Here are the tips that can help your Crypto future trades make more money:
- Low leverage
- Understand fees
- Technical Analysis
- Automated Bots/tools
- Risk management
- Read the market
- Do your own research.
Let’s discuss these in detail then.
Low Leverage/margin/loan
If you’re leveraging (taking a loan for more than your actual capital) try to keep it as low as possible.
The lower your leverage, the lower your risks. Here’s an example, imagine you’ve $100. You leverage it 100x. You can now open a position worth $100X 100 = $10,000. Your initial capital ($100) is just 1% of your leveraged position.
Now, if the market moves in your direction (either long or short) by even 1%, you’d make $100. You’ve doubled your money, a 100% profit, while the market moved just 1%.
The problem is, you’d also be liquidated with no way to recover your funds if the market moves against your position by just 1%.
In simpler words, the lower your leverage, the higher your risk margin can be.
The best advice from me is to NOT leverage and simply use whatever capital you’ve actually got.
Pay attention to the fees
It’s very important to use a fee-friendly platform to trade Crypto futures else your profits may be significantly reduced.
Unlike spot trading, Crypto future trading may have additional fees apart from the “trading fee”.
That’s right. There’s the normal trading fee but some exchanges may also incur a funding fee or a premium fee for allowing futures.
Technically analyse
Regardless of what type (spot/margin/futures) of trade you’re executing, indicators can help you massively.
This does require some study and research but is mostly worth it. The most common indicators you can start with are moving averages, RSIs, Bollinger Bands, MACD (Moving Average Convergence Divergence).
Do note that these indicators aren’t magic lamps. They simply “indicate” a movement and not guarantee it.
Automated bots/tools
You may entertain using automated bots/tools. It’s a dual-edged sword that has its benefits and problems.
The two major benefits are speed and accuracy. These bots can execute trades faster than a human can and they almost always spot the pattern they’re programmed to spot. They also get rid of the emotional baggage that weighs down nearly all traders when making decisions.
On the flip side, bots will always follow set rules regardless of any real-world changes or major events. Moreover, they may even entirely fail to execute trades or just may be less secure than you think them to be.
Risk management
This is probably one of the biggest mistakes all traders make. Again, while it’s important for spot trades the importance is magnified for future trades. There are a few basic things you can do to manage your risks:
- Set stop losses: Ensure the maximum loss you’re willing to bear and set an automated closing price. You may set take-profit prices as well to automatically close your position when you’re up.
- Diversify: Do not put all your eggs in one basket. You may open multiple positions with multiple Cryptocurrencies instead of just one.
Read the market
Again, you must read the market regardless of what type of trade you’re executing. Just because you’re trading futures doesn’t mean the market will react any differently than it would for your spot trade.
I’d advise doing the following:
- The trend is your friend: Generally, and statistically, following the market trend is a good idea. While reversals are possible, the trend still offers higher probability than a reversal.
- Real-world events: Major events may impact the crypto market significantly. Everytime China bans Crypto, it generally plummets. The war between Ukraine vs. Russia, or Elon even tweeting about Dogecoin all have had major impacts on coins.
- Historical patterns: If specific events are due, e.g. the Bitcoin Halving, these can be used as good hints to read the market’s historical behaviour.
Do your own research
This is both a legal disclaimer, as well as a Crypto future trading strategy. No one knows what the market will do. This means no matter how much money some Youtuber or advisor has made, it doesn’t guarantee future profits.
In other words, never take financial advice on surface value. Always do your own research. Of course, the offered advice can serve as a base. You can research more on how to use the offered advice better. But don’t just simply make decisions based solely because some “established” finance guy/girl asked you to.
This also extends to this article. While the strategies above should help you, there’s no guarantee.
Conclusion
I hope you’ve gained at least a few new insights as far as trading Crypto futures go, haven’t you? No, this article wasn’t meant to be a “make you a millionaire overnight” guide. That guide doesn’t exist, anywhere.
I can simply sum it all up saying never risk more than you can afford to lose. Always keep your leverage at the minimum and if possible null. Do not take random influencers’ advice without your own research. Ensure you’ve implemented proper risk management.
Finally, the first and most important aspect is choosing the right coin. Spend enough time reading the market, technical as well as fundamentals for any coin you wish to start buying.
