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How to Make Money in Cryptocurrency Futures Trading


In the first quarter of 2020, the trading volume in cryptocurrency futures and spot markets was around $8.8 trillion. This is a massive jump in the quarterly numbers when compared to previous years. It proves that cryptocurrency futures trading is here to stay for a long time. 

If you want to make money in this market but lack the in-depth knowledge, consider these tips. It will help you in avoiding the hazards and risks of trades going wrong. Here, they are:

Understand the Basics

Before entering any trading domain, it makes sense to understand the fundamentals and critical components of the specific market. If you want to deal with cryptocurrency futures, you have to begin with learning about blockchain, decentralization, and market trends. Also, learn more about smart contracts and wallet systems used for cryptocurrency trading. 

Here, you have to understand that future contracts are speculative, and you can wager on the expected future price of a cryptocurrency to make profits. Knowing about the terms like trading volume, value differences, and market capitalization will help you to avert risks in the market. 

Know the Risks and How to Handle Them

In cryptocurrency trading for futures, you may be exposed to several degrees of risk. When trading in stable currencies like Ethereum and Bitcoin, the risk is small. But, the rate of growth is also slow for these currencies. 

However, when you deal with coins with lower market capitalization, the risk and growth potential are higher. Generally, cryptocurrencies release only a small amount of supply, causing prices to fall whenever retained currencies or coins are aplenty. 

Learn How to Leverage

Since futures are capital-efficient, you don’t need more money to open positions. For example, even if you have ten bitcoins, you can trust 100% of your money for spot exchange selling or invest 20% of this money on margin exchange. 

Now, if you have 50x leverage on futures, you can put just 2% of your money on the exchange and take positions up to 50x.

Know About Contract Expiration and Settlement

When making trades in the cryptocurrency futures market, contract expiration and settlement are two essential terms that hold value. Expiration refers to the legal date when your contracts and trading activity will expire. 

The settlement also takes place on a specific date. But, it is a fulfillment of a delivery obligation related to the original contract. So, when the specified period comes, the holder of the contract receives the value of underlying assets determined according to the market prices at the settlement’s date and time. 

Apply Technical Analysis

With changing trends and patterns, you may find it difficult to follow the trading direction of cryptocurrency futures. This is where technical analysis can save your day. It helps in determining the exact time and date to buy or sell a contract. So, when learning about the basics of this market, take your time to understand the technical charts. 

Learn more about indicators, candlesticks, support levels, and resistance to understand market trends. You can also take help from exchanges that offer technical analysis charts to both beginners and experienced traders. 

Keep an Eye on Latest Updates

No matter which trading market you follow, the latest updates and news have a significant impact on the trade positions and prices. The same applies to cryptocurrency futures as well. Here also, you have to stay updated with the latest announcements, rumors, news, and reports about coins and tokens. 

You can keep in touch with communities and leading online resources for this purpose. There are various forums, social media pages, and aggregation websites where you can find relevant news and valuable data about the market.

Focus on Security

Despite the growing popularity of cryptocurrencies, the blockchain economy is still vulnerable to fraudsters and hackers. It poses a significant risk to your investments. The trades are relatively uncontrolled and complex unless you understand the basics. Hence, you will do better by being cautious. 

If you have an exchange account, choose multiple level authentications, and secured passwords to access your trades. Try to store your data on a hardware device and do not share critical information with anyone. 

Choose the Right Exchange

Many cryptocurrency exchanges are available to allow cryptocurrency futures trading. You have to choose a relevant exchange depending on the permitted trading volumes, assets, reliability, and fees. The exchange should also allow margin trading and fiat gateway for traders.

With proper knowledge and understanding of the fundamentals, you can avoid risks and make good profits in cryptocurrency futures markets.

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