Futures trading is not entirely the same as regular trading, despite the similarities. Here are several key aspects you should know and some pro tips for new users to review before they enter the crypto market.
Learn the basics
Properly preparing to trade requires understanding the key elements of the market. Learn how blockchains work and how cryptocurrencies might be used in the future. You need to understand smart contracts (ERC20 and ERC223) and tokens on the blockchain. The market should also be assessed for crypto futures.
The trading of bitcoin and ETH futures requires an in-depth understanding of the futures market and the markets of these specific coins. Tokens and coins typically have much lower market capitalizations than stocks. So, they are risky but also have a higher potential for growth.
Identify the fundamentals
If you are new to trading, do not make a hasty judgment. Saving or earning money ahead is possible if you plan. There are a wealth of cryptocurrency forums, blogs, and social media profiles where you can learn about trading and investing.
Read articles from various sources, decide whether to trade or invest and create a trading plan. A solid understanding of the futures market basics, such as market capitalizations, trading volumes, and price versus value, is also required. New users should also learn from experienced users.
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Consider Risk Management
Three basic categories of risk exist in cryptocurrency trading. Established coins, such as Bitcoin and Ethereum, reduce your risk exposure, but future growth is likely to be modest. When you trade coins and tokens with smaller market capitalizations, you can earn more and take more risks.
Oversupply of tokens or coins can lead to dwindling prices; certain cryptocurrencies release a limited amount of their supply.
Learn how to interpret technical charts
Media and technology development affect cryptocurrency prices greatly. Although this is the case, technical analysis can help determine when to buy or sell.
You might also want to learn about candlesticks, supports, resistances, and indicators, such as moving averages and relative strength indices. If you lack superior expertise in technical analysis, you should not engage in trades based solely on that analysis.
Analyze the project’s fundamentals
The fundamentals of a project should be carefully examined before investing in cryptocurrencies. A project’s benefits will be a key indicator of an asset’s appreciation. Trades and investments have historically been successful when technology, team, and use cases are analyzed.
Keep these points in mind. Do not be misled by hype. Consider consulting with a trusted expert if you lack the knowledge to evaluate technology independently. Be careful, as you are dealing with large sums of money here, and you cannot trust every expert you find.
Keep up with the News
The prices of coins and tokens often rise when there is important news. Therefore, you need to stay updated on news, announcements, and rumors. Visit popular blockchain magazines and communities daily to ensure this is done properly. CoinTelegraph, CoinDesk, and Reddit provide information about cryptocurrencies. Other news sources are also available for your research.
There is no doubt that entering the cryptocurrency trading industry is an extremely difficult endeavor. If you prepare yourself, learn the basics, and then apply what you learn, you can succeed in cryptocurrency and futures trading.
Cryptocurrencies are subjected to high market risk and volatility despite high growth potential. Users are strongly advised to do their research and invest at their own risk. BitMart will do its best to list only high-quality coins, but will not be responsible for your investment losses.
All content produced by BitMart is intended solely for educational purposes. This should not be taken as financial or investment advice. Individuals are advised to perform due diligence before purchasing any crypto as they are subject to high volatility.