Before understanding what bitcoin leverage trading is, it is worth knowing what bitcoin futures trading is. Futures, also called futures contracts, is an agreement to buy or sell a physical asset, like a currency, commodity, etc., or a financial asset, like a cryptocurrency(bitcoin), bond at a predetermined price at a specified future time.
Regarding bitcoin futures, the contract will be based on the price of Bitcoin, and traders can speculate the price of bitcoin in the future by longing or shorting positions. Bitcoin futures trading allows traders to earn their profits no matter speculating the bitcoin price goes ups or downs. And traders can obtain great profits even in a turbulent market. Opposite to the traditional futures contract, a perpetual contract is an innovative derivative product that has no expiration date. In other words, traders can hold a position for as long as they like if not being forced to liquidate.
Usually, bitcoin futures trading is used with leverage, which can enlarge a trader’s purchase power and multiply his/her profits by borrowing 10x, 25x, or even 100x leverage from exchanges. That is called leverage trading, to invest small but gain more profits.
For instance, you use 1 BTC to open a contract when the bitcoin price is $10,000. With the use of 100x leverage, your contract will worth 100 BTC.
In the bull market when the price increase to $11,000 and you long 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 short BTC in futures trading, you will get:
100 BTC * ($10,000 – $9,000)/$9,000 = 11 BTC
However, leverage trading increases the potential for profits as well as risk. It is important to keep track of opened positions in order to prevent large-scale losses. You can set a take-profit, stop-loss, or use other risk management tools to guarantee the profits you get and lower the risks that you may suffer a loss.
How to gain your profits with lower risk?
- Plan your trade and trade 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 without having any idea of when to sell at a profit or a loss. Advanced traders know at what price they are willing to buy and sell. And they tend to consider the resulting returns against the probability of the bitcoin market reaching their goals. If the adjusted return is high enough, they execute the trade.
Conversely, immature traders often enter a trade without having any idea of the points at which they will sell to gain a profit or stop a loss but leading by emotions that take over and direct their trades. Losses often tempt traders to hold on and hope to earn their money back, while profits can entice people to imprudently hold on for even more gains.
- Trade with a small investment
Never putting your eggs in one basket simply means do not put all your money in a position. You are setting yourself up for a great loss if you put all your money in one position. Always remember to divide your investments. Not only does this help you manage your risk, but it also provides you an opportunity to close a position when you find 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 leverage futures trading with perpetual contracts on BTC, ETH, LTC, EOS, XRP and etc. With an intuitive interface and trading simulator, users can get familiar with the cryptocurrency futures market and practice their strategies before starting real-time trading.
- Trade with 10 BTC in Your Demo Account
Once you registered successfully with your email address and verification code, a trading account and a demo account will be created automatically. 10 BTC is in the demo account and you can start to practice at any time you like. Like the old saying, practice makes perfect, it is recommended to every trader to use the trading simulator before getting started.
- Claim a 100% Deposit Bonus to Expand Your Fund
Bexplus is running an activity for users to gain more profit by expanding their funds. After deposit 1 BTC, 2 BTC will be credited to your account. The bonus is not withdrawable but the profit it generated can be withdrawn. A 100% deposit bonus that is ready for you.
- A User-friendly Interest-bearing Wallet
If you are holding bitcoins but would like to practice with a trading simulator first, you can still gain real profits in the meantime. Bexplus provides its users with a risk-free wallet to enjoy up to 21% annualized interest. All BTC stored in the wallet is highly secured and protected. And our system will automatically calculate your yesterday’s revenue on a daily basis, and yesterday’s earnings revenue will be settled on the first day of the next month.
Follow Bexplus on:
Website: Bitcoin Exchange – 100x Leverage
Apple App Store: Bexplus – Profit from Cryptos on the App Store
Google Play: Bitcoin Trading & Margin Trading – Bexplus App