From the LBank blog.
There is no magic wand to trading crypto futures, but there is a right way to do it. Like every other asset class, you will need the right tools and experience to make profitable trades. To trade crypto professionally, you will need additional criteria compared to your typical everyday job. This is the base crypto trader psychology and then furthered by a range of technical analysis strategies.
LBank Futures trading platform enables users to buy or sell crypto futures contracts. With LBank futures, crypto traders are able to speculate on the future value of a digital asset with cryptocurrencies such as Bitcoin as the underlying asset. LBank Futures provides a wide range of tools to trade crypto like a Pro. This article is going to explore a few of them.
Crypto futures trading is a widely-known trading method that allows traders to speculate on the future value of a digital asset at a certain time. The contract grants the holder the right to buy or sell an asset at a specific price on a certain period. While there are hundreds of crypto futures trading platforms and strategies, choosing the right platform for crypto futures trading is essential to properly execute your trades.
To get started on LBank, all you need is to create an account, verify an account and deposit funds. Once you are set, you’ll be able to browse through several contracts available for cryptocurrencies, including Bitcoin (BTC) or Ether (ETH). Moving on, you can access the following analysis tools to improve the efficiency of your trades.
- Grid Trading
Grid Trading is an interesting crypto futures trading tool that eliminates the natural back-and-forth motion of the market in order to place orders both above and below the current market price, thereby ‘trapping’ profits as the market proceeds.
This tool doesn’t require active market forecasts; you only determine a price range in a timeframe to ensure positive returns on the trading strategy. However, while this may be considered a benefit, there are certain issues, such as trading psychology, complicated risk management and, of course, personal sentiments, that have to be controlled. With LBank’s grid trading, new positions are automatically executed upon the previous closing of a trade.
2. Advanced Take Profit and Stop Loss
Crypto futures trading can be very risky if proper money management is not done. These tools are essential, and it is very difficult to safely and consistently make a profit in crypto futures without making proper use of these tools.
With LBank’s TP/SL tool, you can reduce your risks — realize your profits and minimize your losses. Stop loss is simply the basics that traders always use to manage and control the maximum amount that they are willing to lose on a trade.
Take Profit is similar to stop loss order, only this refers to profits. If your trade reaches a certain level of profit, this advanced tool automatically closes your trade at your set conditions. This market exit essentially prevents you from missing your chance to make profits. Better enabling you to realize potential profits from trades.
3. Consider Risk Management
Cryptocurrency trading carries significant risks, and it’s important to understand the three basic categories of risk — established coins, smaller market capitalization coins and tokens, and limited supply cryptocurrencies. While established coins like Bitcoin and Ethereum offer a lower risk exposure, their potential for future growth may be modest. On the other hand, trading smaller market capitalization coins and tokens can offer higher potential returns but also comes with greater risk. Additionally, some cryptocurrencies only release a limited amount of their supply, which can affect their price.
4. Time-weighted average price (TWAP)
Popular among several crypto futures platforms, LBank’s time-weighted average price (TWAP) measures the value of an asset’s average price over a predetermined period of time. TWAP is calculated for any set time duration, and the trading algorithm automatically optimizes a trade’s average price triggered over a particular time period. Traders can essentially use this to execute large orders expected to affect the market.
For example, say you buy 10,000 bitcoin of an asset. In the process of making the strategy, one can choose from two possible strategies. One, a trader can issue orders to purchase 500 portions every 15 minutes for 5 hours. Two, the trader can implement a strategy in which the order is issued to purchase 1,000 portions every 15 minutes for 2.5 hours.
With a time-weighted average price, it is simpler to track the trading pattern of the market and ultimately use it to one’s advantage.
5. Interpret Technical Charts
This is an essential tool for cryptocurrency futures traders. The volatile nature of the cryptocurrency market makes it important to be able to identify patterns and trends that can help determine the best time to buy or sell.
To effectively analyze technical charts, it’s essential to understand candlesticks, supports, resistances, and indicators like moving averages and relative strength indices. However, it’s crucial to note that technical analysis should not be the sole basis for making trading decisions. It’s crucial to consider other factors, such as news, market sentiment, and fundamental analysis.
To improve and make tangible profits in cryptocurrency futures trading, it’s important to learn technical analysis such as TWAP, stop loss/take profits etc., but these should not be the only factor considered in making trading decisions. Risk management is also essential to minimize potential losses and maximize returns.
Disclaimer: Derivatives are often volatile, and this can be a risky investment. The information provided in this article is solely for educational purposes and shouldn’t be regarded as financial advice.
This article came directly from the LBank blog, found on https://lbank-exchange.medium.com/five-tools-to-trade-crypto-like-a-pro-on-lbank-futures-a5aa6bd69e16?source=rss-87c24ae35186——2