Chances are you have heard your friends venturing into Bitcoin futures. But do you know what it is? Or what opportunities it has for investors?
To put it in simple words, bitcoin futures are nothing but derivative financial instruments that require buyers to invest in an underlying asset at a pre-set rate and date. Likewise, you can sell the underlying asset at a pre-set rate when the circumstances are right.
In crypto futures trading, Bitcoin is by far the most common underlying asset. Most people venture into Bitcoin futures to reap the benefits involved. It is a great way to invest and earn profits. To find out more about Bitcoin futures trading, you should give this article a read.
Profit Generation Through Bitcoin Futures
Do you wonder why people venture into bitcoin futures? It’s because it helps them earn a great amount of profit. The way to make a profit is to bet on the right price movements. Investors assess the market conditions and bet when the time is right.
Let’s say, you open a long position in the crypto market to purchase Bitcoins and speculate its value will increase in the future. To be able to buy Bitcoins at the current rate, you will have to purchase a contract and hold it until the expiration date. If the price increases within this period, you end up making a profit.
On the other hand, you open a short position if you predict the value to fall. The difference between the price drop and the rate at which you bought the Bitcoins is your profit amount.
Overall, bitcoin trading futures is mostly about buying and selling BTC. If you do it correctly, you can earn a good profit out of it.
Bitcoin Futures Trading Strategies
When venturing into bitcoin futures trading, it is essential to have a few good strategies up your sleeves. With the right strategies in place, you can go a long way in this field. Here in this section, we will share a few good bitcoin futures trading strategies with you.
Swing Trading
Swing trading requires you to hold a position for a longer time, so you can earn profit from medium-term price changes.
Day Trading
In Day Trading, you generate profit over short-term price fluctuations. Also, it requires you to open and close positions on the same day. Many people choose day trading because it lets them indulge in several small trades on a single day.
Contrarian Trading
In Contrarian Trading, you go against the regular market trends, and do the opposite of what other investors are doing. For instance, you sell when they buy and vice versa.
Trend Following
In this case, you are required to follow the current trend. With the help of technical analysis tools, you can easily identify the market trends.
These are some common strategies that seasoned traders use to become successful in this field. Besides following these strategies, it is important to choose the right crypto trading platform. That way, you can make the most of your trading experience.
Are Bitcoin Futures Taxed?
Before you indulge in Bitcoin futures trading on BTCC, it is important to know about the taxes. When you trade as an individual investor, you are required to pay Capital Gains Tax.
It means, your tax liability increases only when you close your position. We advise you to talk to an expert to find out more about this subject.
Bitcoin futures trading is currently the rage, and you can earn a good deal of profit from it. While it includes a learning curve, it is not as hard as you might think. Once you get a hang of things, you can trade in bitcoin futures with no problem at all.
