First of all, the material will be useful for beginners who have not previously worked with such instruments as futures and options.
If you have already bought cryptocurrency on the spot market, but managed to get tired of volatile fluctuations and subsequent periods of long recovery, perhaps trading cryptocurrency futures is just what you are looking for!
You’ve probably thought about the fact that traders need millions in their accounts to work, or that you need to know absolutely everything about the market in order to trade.
Don’t panic! Almost anyone can start trading cryptocurrency futures!
By choosing realistic profit as your goal, you reduce dependence on the outcome of each trade. It can also help manage stress during trading and have a positive impact on long-term results.
The risk should be proportional to the size of the account. Never expose more than 5% of your equity capital to it on every transaction.
Use exclusively trading strategies with a high degree of probability. Perform a strategic analysis of the risk to reward ratio as well as an analysis of the fundamentals of a trade before entering a position.
Aggregate your profits. Refrain from withdrawing earned funds – reinvest them, gradually increase capital to such an extent that it can cover your expenses (partially or even completely).
Today we will provide some tips to help you get your crypto futures trading commitment back on track. But first, let’s clarify that these tips are not financial advice. They only represent useful principles to consider before starting a trade.
Expectations must be realistic
It is very important to formulate goals and expectations at the very beginning. Trading is difficult for anyone. In this game, both huge wins and losses are possible. Even legendary traders from Wall Street have faced serious setbacks in their careers, although they have their finger on the pulse!
It is important to target realistic profit margins. Remember, even successful hedge fund and traditional fund managers go out of their way to generate consistent returns in excess of two percent a month. Novice traders with a small start-up capital of $ 5,000 should not expect to receive $ 5,000 a month, and generally strive to fully support themselves through trading. Instead of hundreds of percent per month, choose a more realistic goal: consistent growth of 1-2% monthly.
By choosing realistic goals and profit expectations, you reduce dependence on the outcome of each trade. It can also help manage stress during trading and have a positive impact on long-term results.
Strategy is at the heart of long-term success, and trading in the balance is a key element. With the right approach, your small account will gradually turn into an account that can support you, and possibly even provide. This is a worthwhile achievement.
The best way to start any business is to soberly assess your current abilities. In the case of trading, this is the size of your account.
The risk should be proportional to the size of your account
Change your attitude towards your own money. In your mind, every dollar should be one hundred times more expensive than its real value. If you have $ 1,000 in your account, you should be prepared to lose no more than 10 (or 1% of your account). Thus, professional traders usually try not to risk more than 5% of their account value in a single trade. A professional trader with $ 1,000,000 in an account will never risk more than $ 50,000 in one go.
This is a long-term strategy that requires you to prepare a plan for each trade. The strategy is based on the principles of protecting your funds, including countering losses at an early stage, setting realistic goals and controlling emotions.
Finance is often associated with self-esteem, optimism, fear, even mental health and, to some extent, physical health. Remember: it doesn’t matter how much money you have in your account, what the size of your trade, win or loss. Your deals are your own business, so you should focus on your own well-being, not competition.
The approach that every dollar (or less that fits your budget) is valued as the most important part of your portfolio is the basis of emotion control and a clear strategy that determines the entry and exit of a position. It is great for cryptocurrency futures as it allows an investor to trade less than a dollar or any other available currency.
Do not withdraw funds from your account
Leave your funds alone – at first glance, this is simple advice for beginners. Do not withdraw them from the account. You are trying to get rich, which means that you need every grain of money to gradually increase the amount of risk per trade. Your capital will gradually grow. At some point, it will begin to cover your costs in part, and possibly in full (provided that you adhere to the chosen strategies and values).
In addition, withdrawing funds from an account can be interpreted as disrespecting the value of each bill in your possession. Subsequently, it can devalue other principles that you have adopted for trading. Cryptocurrency trading is a long-term game that should not be seen as just an opportunity for instant gratification. On the other hand, funding your account as soon as possible is a really good idea.
Of course, everything happens in life, and the value of trade can sometimes give way to something else. For example, in the event of an emergency or other unforeseen events. But let’s hope this never happens!
Use exclusively trading strategies with a high degree of probability
The key factor that accompanies trading with low volumes (and reasonable leverage) is a high probability trading strategy. It can be determined by strategically looking at the foundations you rely on. Find support and resistance levels, trend lines, market volume, use Wyckoff’s method for shape and time, follow recent market movements, and more.
By aligning the analysis with your sentiment, you can show more confidence in the trade. The analysis process should help you further rank the likelihood of risk in the future as you learn about the impact of patterns on market psychology, institutional influence, and more.
High risk is only justified under incredibly accurate scenarios, but even then, keep your fundamental principles in mind. If for some reason the trade goes wrong and you lose money due to high leverage, would that be worth it? If so, go ahead!
Aggregate your profits
By aggregating profits, you are helping to increase your account. You have successfully closed a trade based on a high probability strategy and you feel like you can safely continue the streak. By setting an additional stop loss along the trendline selected for the first trade, with a high risk to reward ratio, you can further increase your profits.
This technique should only be used when absolutely certain, as applying 10x leverage on 2% of your portfolio can rob you of 20% of your investment. At the same time, victory in this scenario will allow you to hit a good jackpot, and besides, it will give you hope. The expectation of a high probability of winning can also set you up for continued positive momentum.
How do I trade futures contracts on Binance?
You can trade futures contracts on the largest cryptocurrency exchange Binance. This is the safest option and with the lowest fees available on the market. To get started, you need to register on the official website of the exchange https://binance.com.
How to start trading crypto futures on the exchange:
- Open a futures trading account with Binance. Please note that you must enable 2FA to fund your futures account and trade on Binance Futures. You can find out more about opening an account here.
- Deposit funds in USDT, BUSD, or any other available cryptocurrency on Binance Futures. Binance Futures supports a wide range of crypto assets as collateral.
- Select the desired futures contract. There are two types of Bitcoin futures available on Binance: USDⓈ-M and COIN-M futures. So, if you want to trade BTCUSDT perpetual contracts, go for USDⓈ-M futures. For BTCUSD coin-margin contracts, choose COIN-M futures.
- Choose the appropriate leverage for your futures contract.
- Choose from one of the order types available on Binance Futures. Newbies can choose a limit order or a market order to buy their first futures contract.
Getting started trading small volume crypto futures is no easier than starting trading with millions of dollars in your account. The same principles are required here, as well as a careful attitude towards every bit of capital that you risk. Any investment should be based on a high probability of winning, and excessive leverage should not jeopardize a significant portion of your account equity.
Trading can be tense. Emotions, along with other factors, can easily influence her. It’s important to remember where you started, learn from your mistakes, and think ahead. Losing a trade or missing out on an opportunity is not so scary as long as it can teach you something. Winning a trade is important only because it helps you move towards your goal. In any case, practice is more important than the result. Practice allows you to improve, and the desire to learn and the search for opportunities will help you move forward in trading.