Trading crypto derivatives can be a very profitable enterprise provided that you understand truly what you want to accomplish. Structure and order in your trading techniques in general regardless of what you trade are necessary steps towards long term success. What you need for long-term success is to be able to replicate a formula if you will when trading. Otherwise, what ends up happening is that you can win a couple of times out of luck. Long term though, you’ll probably end up losing more than you make. To avoid this here are 5 best practices for trading cryptocurrency derivatives.
Stick To One or A Few Cryptocurrencies
You can’t necessarily monitor the developments of 10 cryptocurrency assets at any given time. Some people are able to do this, but even with 5 different assets you would need the right setup, and a ton of experience. If you’re just starting out pick a couple of cryptos that you’re interested because of their potential, the spread that you get or whatever it may be, and really dive deep into that market. This is going to allow you to predict with more accuracy where things are headed as you’re likely to have more knowledge of the asset.
Find The Right Platform To Work With
This is going to be key to your success in so many levels. It’s going to dictate how you operate from the begging. For example with the Solana DEX platform you’re able to operate completely within the decentralized banking system. This allows you to have more freedom to operate with your capital than what you’ll have in centralized platforms. Also the platform is going to dictate the spread, the price, what you can invest in. It’s arguably the most important decision that you have to make as a new investor.
Trade Within A Price Range That You’re Comfortable With
Now we’re getting into more practical advice. Plenty of people look into crypto derivatives, and want to trade what’s popular. Is what’s popular something that you can afford? Really not falling into weird trends can save you from heavy losses.
The Right Time Frame To Complete The Trade
With crypto derivatives the time that passes between when you agree to the contract to when you collect is a major part of the operation. You have to make sure that you’re going to have enough funds to cover up if things go south. When you deal with time in the right manner you’re able to open up new investment avenues as you could potentially invest in other assets within dead time frames that you may have.
Only Trade Once You’ve Completed The Previous Tasks
It may seem like we’re putting too much weight on our own advice here. At the end of the day, you can trade whenever you want to trade. However, putting in real money only when you feel ready to go is going to save you a ton of money down the line. In fact, trade in demo accounts first if you can.