Crypto futures is a popular financial instrument on the crypto market used mainly by experienced investors. Futures involve price speculation, and many strategies are developed for this type of trading. Here are some popular futures trading strategies:
- Long or short
- Breakout
- Trading the range
- Pullback
- Spread trading
These are some futures trading strategies that work efficiently for experienced investors. Let’s discuss how does crypto futures work.
Table of Contents
Long Or Short
It is probably the most common strategy used for futures. A user picks if one goes long or short, depending on one’s price forecast. For example, if you think the crypto price will drop by some exact day in the future, you open a short position. First, you sell your assets, and when the price drops, you buy them at a lower rate. Thus, you make a profit and still hold your coins.
If you think the value of an asset will increase, you open a long position and wait until the futures contract expires. If your forecast was correct and the value really grew, you sell your coins at a higher price.
The Pullback Strategy
This crypto futures trading strategy is based on coin price pullbacks. On the highly volatile crypto market, prices often drop or boost below or above support and resistance marks. Then they reverse and move back to the mark they have broken.
The resistance mark is the price level the market can hardly break. The support mark is the level of the price the market feels challenging to break below; that is, the price hardly falls lower than the support mark.
When the market is moving upward, the price goes above the resistance mark, breaking it, and then it may retest the previous resistance mask once again, moving in a reverse direction (down). But if it does not happen (if the price does not drop to the previous resistance mark), a trader opens a “long” position.
Another case is when the market falls, the asset price decreases and breaks the support mark. Then the price moves in the reverse direction, retesting the support mark again. It creates a pullback when the market falls, and a trader opens a short position.
