Before understanding what bitcoin leverage trading is, it is worth knowing what bitcoin futures trading is. Futures, also called futures contracts, are an agreement to buy or sell a physical asset, such as a currency, a commodity, etc., or a financial asset, such as a cryptocurrency (bitcoin), a bond at a predetermined price in a specific future tense.
With regard to bitcoin futures, the contract will be based on the price of Bitcoin, and traders can speculate on the price of bitcoin in the future by long or short positions. Bitcoin futures trading allows traders to make their profits regardless of speculation that the bitcoin price go up or down. And traders can make huge profits even in a turbulent market. Unlike the traditional futures contract, a perpetual contract is an innovative derivative product that does not have an expiration date. In other words, traders can hold a position for as long as they like if they are not forced to liquidate.
Typically, bitcoin futures trading is used with leverage, which can increase a trader's purchasing power and multiply their earnings by borrowing 10x, 25x, or even 100x leverage from exchanges. That's called leverage trading, to invest little but get more profit.
For example, you use 1 BTC to open a contract when the price of bitcoin is $ 10,000. With the use of 100x leverage, your contract will be worth 100 BTC.
In the bull market, when the price increases to $ 11,000 and you bet on BTC in futures trading, you will get:
100 BTC * ($ 11,000 – $ 10,000) / $ 11,000 = 9.1 BTC
In the bear market, when the price drops to $ 9,000 and you are short on BTC in futures trading, you will get:
100 BTC * ($ 10,000 – $ 9,000) / $ 9,000 = 11 BTC
However, leverage trading increases profit potential and risk as well. It is important to keep track of open positions to avoid large-scale losses. You can set a take profit, stop loss, or use other risk management tools to guarantee the profits you make and reduce the risk of loss.
How to obtain benefits with less risk?
- Plan your trade and exchange your plan
There are two key risk management tools for traders to plan ahead when trading, Stop-loss (S / L) and Take-Profit (T / P). Successful traders know the importance of planning, while unsuccessful traders often enter the market with no idea when to sell at a profit or loss. Advanced traders know at what price they are willing to buy and sell. And they tend to weigh the resulting returns versus the likelihood that the bitcoin market will hit its targets. If the adjusted return is high enough, they execute the trade.
In contrast, immature traders often enter a trade with no idea of the points at which they will sell to make a profit or stop a loss, but driven by emotions that take over and direct their trades. Losses often tempt traders to hold onto and hope to get their money back, while profits can prompt people to recklessly hold for even more profit.
- Trade with a small investment:
Never putting your eggs in one basket simply means not putting all your money in one position. You are setting yourself up for a big loss if you put all your money in one position. Always remember to divide your investments. This not only helps you manage your risk but also gives you the opportunity to close a position when you realize that you are speculating in the wrong direction of the market.
Where to start your practice and trade?
Bexplus, a leading crypto derivatives trading platform for both beginners and veterans, offers 100x leveraged futures trading with perpetual contracts in BTC, ETH, LTC, EOS, XRP, etc. With an intuitive interface and a trading simulator, users can familiarize themselves with the cryptocurrency futures market and practice their strategies before starting to trade in real time.
- Trade 10 BTC on your demo account
Once you have successfully registered with your email address and verification code, a business account and one will be automatically created. demo account. 10 BTC is on the demo account and you can start practicing anytime you want. As the old saying goes, practice makes perfect, all traders are advised to use the trading simulator before starting.
Bexplus is running an activity for users to make more profit by expanding their funds. After depositing 1 BTC, 2 BTC will be credited to your account. The bonus cannot be withdrawn, but the profit it generated can be withdrawn. A 100% deposit bonus that is ready for you.
If you have bitcoins but would like to practice with a trading simulator first, you can make real profit in the meantime. Bexplus offers its users a risk-free wallet to enjoy up to 21% annual interest. All the BTC stored in the wallet are highly safe and secure. And our system will automatically calculate your income from yesterday on a daily basis, and the income from yesterday's earnings will be settled on the first day of the following month.
Follow Bexplus on: