While trading futures, you can either make massive profits or make mistakes that can wipe out most of your capital or sometimes all. Futures trading is a contract where investors can bet on the future price of a cryptocurrency like Bitcoin. When you speculate on the future prices of these assets, you can trade them without owning them.
Futures trading can be quite risky. Therefore, if you are a futures trader or intend to be, you must have extensive knowledge of some trade rules before venturing into trading futures.
When you know futures trading rules, you will be able to know what to do and what to avoid when carrying out your trade.
Here, you will get a futures trading guide that you need to understand if you want success as a trader.
1. Get a Trading Strategy
If no one has told you before, you need to have an established trading strategy before going into the crypto market to trade futures.
The reason behind this is quite simple; when you don’t have a trading strategy, you follow whatever comes up with the market. But when you have a trading strategy in place, you will know what to do no matter the situation; it tells you when to exit the market.
Traders are advised to refrain from making their trading decisions after opening a market position. Imagine deciding when you are supposed to leave for the market, and then you lose everything.
With a futures trading guide, you minimize the time it takes you to make a trading decision when you are already in the market. A trading strategy will also include risk management tools and breakout orders.
2. Correct Margin Call Errors
Sometimes futures traders are hit with a margin call because they stayed too long with a losing trade. When you allow this to happen from time to time, you will realize that many funds will be lost within a short time frame.
You should treat margin calls as a reminder that you should not attach too many emotions to any of your trades. The crypto market is volatile, and losses are bound to occur no matter how experienced you are. It is better to leave the trade altogether when you lose position or risk losing more money.
3. Trade What You Can Lose
One of the things that ended the career of some futures traders was trading all the money they had, thinking they would make a profit all the time.
The crypto market is already volatile, and trading futures worsen it. Even if you are a professional, there’s no reason why you should enter the futures market with everything you have.
You should trade what you can afford to lose because you can still return and correct your mistakes.
4. Start Small and Increase Afterwards
One error beginners make when they start trading futures is they want to go into the market like professionals. The professional you are looking up to took years to become good at what they do in the futures market.
Learning the exact things that work in futures trading will take time, so there is no need to rush. Instead of trading five or more contracts when you are just a beginner, you can start with one of two futures contracts and then increase them with time.
Consider downsizing your futures contract to accommodate your budget. You can go for exchanges that offer micro E-mini futures products.
5. Learn to Admit You Are Wrong
Admitting you are wrong is so powerful that it can save you from losing more money, but only a few people admit they are wrong.
When trading futures in the crypto market, it is better to admit you are wrong and pull out of a trade than be stubborn. The more persistent you are about your errors in a trade, the more you will lose money.
6. Long-term Perceptive
Futures are short-term trading, but you should focus on the long-term wise whenever you are trading.
Some traders are so focused on what is happening currently in the market, which can be a loss, that they forget to think long-term.
Instead of being fixated on the current loss, you are taking in the market, try to think of great futures trading strategies you can apply next time.
7. Don’t Trade too Many Markets
While trading futures, there’s a lot of work to create one successful trade. You need to study the chart of the asset you are trading, you need to read the opinion of analysts within the market, and you still need to keep up with the latest news.
If you have more trades, you may need help to keep up with the work required for each trade. So it would be best if you narrowed down your futures trade but not too much.
Futures trading is an excellent avenue for making a good amount of money, and you can also lose money trading futures within seconds.
To curb the number of losses you incur, there are some futures trading rules, such as having a good trading strategy and trading what you can afford to lose.