Cryptocurrency assets are known for their high volatility compared to other types of assets. This factor has attracted to the crypto market those traders who agree to consider greater risks in exchange for an opportunity to get increased returns.
By simply buying an asset when the price drops and selling it when the price goes up on the spot market, traders can get decent returns. But what if the trend goes in the opposite direction?
With futures trading, investors can not only benefit from both rising and falling markets but also get increased returns by using leverage when trading. The opportunity of getting high revenues comes at a cost of increased risk which cannot be treated light-mindedly.
Despite the advantages of futures trading, responsible trading should still be a top priority for anyone who wishes to invest in crypto. Trading on the futures market may generate significantly more revenue compared to spot trading, but, at the same time, traders face the risk of losing up to 100% of their investments.
Another thing you should always keep in mind is knowing your limits. You must ensure that your emotions are held in check and do not interfere with your decisions.
How Trading Responsibly Can Help
Trading futures can be highly rewarding. You can use features, such as leveraging, to multiply your profits. The idea of borrowing funds on futures to make larger profits is attractive.
However, if mishandled, it can lead to significant losses. By learning to understand how the futures market and leverage work, you can maximize your profits and minimize the impact on your portfolio in case of a sudden trend reverse. Still, no matter how much experience or caution you have in trading, the possibility of losing in trade always exists.
Sometimes, the loss can be a streak. Responsible trading will help you identify unhealthy trading habits, and learn to stop when necessary. Keeping yourself in check and using well-defined procedures to avoid compulsive trading disorder can help in managing your losses effectively. Risk management is a significant concept in the success of every winning trader.
Tips to help you trade responsibly
Practise self-discipline
You make decisions about trading activities in your account. Any bad decisions such as compulsive trading may lead to huge losses. Self-discipline means avoiding any unhealthy trading exercises that you can spot. You need to practice self-discipline when you feel pressured to trade by losses, or when you are experiencing a fear of missing out (FOMO).
Never stop educating yourself
When it comes to crypto, there is no “the only best way” to manage all the trades. You have to combine intuition with technical analysis, gain experience, and improve your trading skills. This calls for continuous learning and practice, to stay sharp and competitive.
Well-established crypto exchanges like Binance and trading platforms like Bitsgap offer learning tools which may help you analyze market trends and build informed and unbiased vision of their own trading strategy.
Learning may equip you with the knowledge and experience to navigate in the fast-paced crypto environment.
Have a trading plan
Create a trading plan and stick to it. Let the plan define the kind of trade you want to have, the trading conditions, and the objectives. It may include:
- Determining how much leverage to use.
- Setting the entry and exit prices for each trade.
- Determining how diversified your portfolio is.
- Determine when to stop trading based on factors such as time and volume.
- Specify the product or asset to trade.
Use the best available trading tools
Trading crypto may be demanding and time-consuming. Spending hours in careful analysis of the market and manually placing buy and sell orders is a real challenge even for the most experienced trader. Especially if the market is open 24/7.
That is the reason why trading bots have become a real breakthrough in the crypto market. Automated bots do not rest, they work days and nights, and are capable of significantly lowering the entry barrier to the futures market. Bots are capable of placing orders with more precision and speed to reach the target profit levels.
The best bot for futures trading
The majority of trading bots enable traders to generate a substantial return by leveraging the rising market. However, you can achieve even more returns by combining HODLing in a rising market and short selling in a falling market.
The Combo bot, designed by Bitsgap for Binance crypto exchange, is unique since it follows the trend in both directions — rising and falling. The trend-following bot combines grid and DCA algorithms to perform futures trading.
The grid technology enables the bot to execute trades on every market move, while DCA optimizes the entry price by applying the dollar-cost average effect. Other features, such as trailing Stop-Loss which eventually starts working as Take-Profit as the market moves according to a trader’s prediction. This feature may become extremely useful when it comes to booking profits during a sharp shortfall.
The Combo bot is designed to generate higher returns quickly, thanks to the leverage tool. However, the potential for high return comes with the increased risk for loss, since the cryptocurrency market is volatile and unpredictable.
Responsible trading is the only way to remain competitive in the crypto market in the long-term perspective. Futures trading may become a source of high revenue but, to achieve that, traders must follow solid trading strategies, develop personal discipline, and leverage the best available trading tools such as Bitsgap Combo bot.
The Combo bot will complement and enhance your trading skill as it is capable of executing trades with the speed and precision unmatched by any human being. However, it is important to understand that the bot will generate returns only if used appropriately. Having some background knowledge about the futures market and how it works is a must before engaging in leveraged trading.
