Futures trading is an opportunity to profit from both rising and falling markets. But it also carries enormous risks that every newcomer should be aware of.
What are futures?
This is a contract to buy or sell cryptocurrency at a predetermined price in the future. The main feature of futures is the ability to use leverage.
Key concepts to know
Leverage: This is like a multiplier for your trade. For example, if you use 10x leverage, you can open a position of $1000 with only $100. This increases both potential profits and losses.
Margin: This is your own funds that you put into the trade. In the example above, your margin is $100.
Liquidation: The most important concept. If the market goes against your trade, the exchange will automatically close your position, and you will lose all your margin. This happens to prevent you from going into negative territory.
Golden rules for beginners
Start small. Trade with small amounts to understand the mechanics.
Use low leverage. Start with 2x-5x leverage. High leverage is a path to quick loss of funds.
Do not trade on emotions. The market does not forgive hasty decisions.
Always use a stop-loss. This is an order that will automatically close your position if it reaches a certain level of loss, saving you from a complete margin loss.
Conclusion: Futures are a powerful tool, but they require a deep understanding of risks and strict discipline. Never invest more than you are willing to lose.
Good luck trading!
