The new DEFI platform enters the market! Earn passively - token sale 0.25 $ I'm going in!

Methods traders use Bitcoin futures to create profit

3 min reading

Most of the time, when data on upcoming contract liquidation is issued, many invoice investors and analysts conclude the debate by claiming that it is the result of degenerate gamblers using more leverage or other risky instruments.

During most of the occasion when data on upcoming contracts liquidation many invoice investors and analysts end the argument saying that its degenerate gamblers using more leverage or other risky instruments. 

There are no doubts that some exchanges are meant to incentivize retail trading to use more leverage, but that does not mean account for the whole derivatives market. Investors like Nithin Kamath, the founder and CEO at Zerodha, questioned how derivatives exchanges could handle utmost volatility while giving 100x leverage. During June 16, Journalist Colin Wu said that Huobi had temporarily left the maximum trading leverage to 5x for latest new users. 

Soon after regulatory pressure and possible complaints from the community, Binance futures limited new users leverage trading at 20x on July 19. A week later, FTX followed the decision stating “efforts to encourage responsible trading.” Sam Bankman-Fried FTX Founder said that the average open leverage position was roughly 2x, and only “a tiny fraction of activity on the platform” would be affected. No one knows is these decisions have been coordinated by any regulator. Cryptocurrencies reached a 5% volatility causes 20x or higher leverage positions to be liquidated regularly. 

Many investors try to learn the benefit of handling the highest possible shares of coins on a cold wallet due to preventing internet access to tokens which reduces the risk of hacks. The downside, is that position might not reach the exchange on time mostly when networks are overcrowded. Due to this reason, futures contracts are instruments traders use when they want to decrease their position during volatile markets. The traders could sell their positions on spot exchanges later after their transactions reached and closed the short position. Whales are aware of the volatile markets; the liquidity is usually less. Due to this some will intentionally open highly leveraged positions, expecting them to be cancelled due to insufficient margins. While they are allegedly losing money on the trade will in an intension to force cascading liquidations to pressure the market in their preferred direction. But one thing to remember is that trader always needs a huge amount of capital and potentially different accounts to conduct such a thing. 

Currency Exchange rate Buy cryptocurrency

Buy crypto now

Dear customer,

We use cookies to provide our services correctly and safely. Cookies are small text-based data sets that shall be saved on the device you are using in connection with the use of this instnat website. Cookies are created in order to ensure proper functioning of thes instant website. By clicking the button "I accept and go to the website", you implicitly agree to creation of the cookies on your computer and to deploy automatic tracking and data collection and processing on behalf of the Lushup Holdings FZ LEE. Click the above-captioned button is also tantamount to accepting website's privacy policy. Closing the notification by means of "X" is unequivocally connected with your consent. If you do not agree to any of the above, please discontinue using our Website.

“Cookies” shall make an identification of the software used by you and to customization of this instant website to your needs. Cookies contain the name of the domain from which they origin, duration of period of their storage on your computer and an assigned value.

Third party cookies:
We also use third-party cookies for the following purposes:

  • creating statistics - helping to understand the way Users use the Website, which allows to improve its structure and content with use of the analytical tools
  • defining a user profile - in order to display custom-tailored content in advertising networks.

External entities that might be source of any third-party cookies on this instant Website are as follows:

Using a settings of your web browser or by using pre-set configuration tools available in our service you can independently and at any time change the settings concerning your use of the “cookies”, specifying the conditionsof their storage and how your device is creating and downloading them. These settings can be changed to block the automatic handling of cookies in the settings of your web browser or inform about their placement on your device each time.

Detailed information about the options related to use of “cookies” is available in the settings of your software (web browser).

Service privacy policy

This instant document lays out the principles of the Privacy Policy on the website (hereinafter referred to as the "Website" or "Service"). The administrator of the Website is Lushup Holdings FZ LEE, Fujairah - Creative Tower, P.O.Box 4422 Fujairah, United Arabs Emirates.

The full document to read the Tokeneo privacy policy is available in this document.

Advanced settings can be changed in your browser.