How to Use Bitcoin Futures to Profit on the Ups and Downs of Bitcoin Price

How to Use Bitcoin Futures to Profit on the Ups and Downs of Bitcoin Price

Are you trying to get into the Bitcoin crypto market but overwhelmed by the technicalities involved, like private keys, hot wallets, cold wallets? Well, I’ve got news for you. You can take advantage of the up and down volatile trends of the Bitcoin BTC without dabbling into any of these technicalities by trading Bitcoin futures.

However, before we get started, let’s do a quick overview of the idea behind futures trading.

The easy way of thinking of futures contracts is that it’s a socially recognized and legitimate way of placing a wager on the future price of anything that has some form of value. It can be gold, interest rates, stocks, soybean, and in today’s modern digital age, Bitcoin.

Let’s take a quick example. 

Two friends may have a different opposing bias towards the future value of an asset, say Bitcoin. Friend-A says the future value of Bitcoin will trade at $23K from its current price of $15K in three months into the future, and Friend-B thinks otherwise.

Well, both of them can draw up a futures contract to bind them in agreement and ensure they comply at the set date/time. Whoever is right on the future direction gets to keep the difference in the exchange rate, in this case, $8K ($23K minus $15K).

So, let’s summarize.

What are bitcoin (BTC) futures?

Bitcoin (BTC) futures are a class of crypto derivatives, which have their value derived from the Bitcoin price. 

Two parties transact (buy or sell) Bitcoin BTC at an agreed date/time in the future, without having to store bitcoin itself.

With Bitcoin futures, you can bet on the Bitcoin exchange rate’s future direction and make the difference if you are right without having to own Bitcoin. The Bitcoin futures market makes it easy for you to get paired against someone that wants to take a counter position to your trade.

You may still wonder about other benefits of Bitcoin futures, other than the ease of entering and exiting trades without having to hold Bitcoin.

Well, Bitcoin futures are traded on leverage, allowing traders to buffer their capital and, consequently, their potential profit. With Bitcoin futures, you can bet on the likelihood of a slump in the price of Bitcoin (AKA short selling) and make a profit if the price of bitcoin enters a downward trend.

To do this, you’ll need a reputable crypto exchange like BTCC.com, offering fast order execution without conflict of interest alongside all the benefits of Cryptocurrency futures trading including Bitcoin futures, Ethereum futures, Litecoin Futures, and more.

 

 

How to use bitcoin futures to speculate on the future price of bitcoin and make profits.

After registering and signing up for the BTCC.com Bitcoin futures exchange, you are now two steps closer to placing your first trade.

Here, we’ll walk you step by step using a visual explainer of a simple yet effective trend following trading strategy to trade Bitcoin futures on the BTCC.com crypto exchange.

The strategy follows the Dow Theory principles, where a bullish trend is identified as successive higher peaks and higher troughs, and a bearish trend is sighted as successive lower peaks and lower troughs.

Bearish to Bullish Trend (Long-Buy)

Using the above image illustration, we will identify a change in Bitcoin trend direction from a downtrend to an uptrend.

First, we identify a bearish (down) trend by connecting the lows to the highs and mark the broken significant support level. From there, we start to track the significant resistance level as we advance.

Since our goal here is to buy into a rising Bitcoin trend, we have to wait for the price chart to signal an end to the bearish trend by a price close above the significant resistance in a downtrend as shown above.

Now that the significant resistance is switched to support, you then wait for the price to correct back towards the level by at least two consecutive bearish closing candlesticks.

You can then go ahead to the order panel on BTCC.com to set your desired leverage, lot size, stop loss and take profit levels, and hit the buy button like in the image below.

It’s that simple. Now let’s check a scenario where we wait for the price to transition from a bullish to a bearish trend.

Bullish to Bearish Trend (Short-Sell)

In a scenario where we look to short the Bitcoin price due to a fundamental event and need confirmation from the price chart before we do so, we first establish that the crypto asset is in a bearish trend.

To do this, opposite to the bullish trend, we connect the troughs to peak and peak to trough in sequence, forming an upward zig-zag pattern.

A price close below the recent significant support marks an end to the bullish trend and indicates we should get set to take a short sell position on the BTCUSD.

Following a breach of the significant resistance, we have to wait for two consecutive bullish closing candlesticks to enter the sell order using the same order panel as with the bullish trend. However, this time, we have to click the sell button after setting our lot size and risk parameters.

BTCC crypto exchange offers Bitcoin trading as weekly futures contracts and perpetual futures contracts.

With the perpetual futures contract, there’s no expiration date or restriction on how long you can hold your trades, as long as you meet up with the required margin.

Below are margin requirements and leverage to profit from up and down swings of BTC price on BTCC.com.

Bitcoin Weekly Futures Contract on BTCC

Trading the weekly contracts on BTCC.com gives you a wide range of leverage to choose from, starting from 10X to 100X.

For a 10X leverage, you’ll only need to provide a margin of 900 USDT per one standard lot. A 100X leverage, on the other hand, allows you to trade with less margin, starting from 90 -900 USDT. 

The 50X and 20X leverages are 180 USDT and 450USDT margin requirements, respectively.

Bitcoin Perpetual Futures Contract on BTCC

The minimum leverage to trade the BTCUSDT perpetual contract on the BTCC.com exchange is 20X and a maximum of 100X.

The required margin for a 20X leverage is 450USDT, 180USDT for a 50X leverage, and 90USDT for the 100X leverage.

Conclusion

With as low as 90USDT, building on the strategy idea in this post and sprinkling some risk/money management juice, you can start trading either the weekly or perpetual Bitcoin futures on the BTCC crypto exchange and begin to profit from the up and downswings.

Go for a free account on BTCC now!

In addition to the English market, BTCC.com is now available in Korean (비트코인 선물), Japanese (ビットコイン先物取引), and Vietnamese (Hợp đồng tương lai Bitcoin). 

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