Many traders frequently express some relatively large misconceptions about trading cryptocurrency futures, especially on derivatives exchanges outside the realm of traditional finance. The most common mistakes involve futures markets’ price decoupling, fees and the impact of liquidations on the derivatives instrument.
Let’s explore three simple mistakes and misconceptions that traders should avoid when trading crypto futures.
Derivatives contracts differ from spot trading in pricing and trading
Currently, the aggregate futures open interest in the crypto market surpasses $25 billion and retail traders and experienced fund managers use these instruments to leverage their crypto positons.
Futures contracts and other derivatives are often used to reduce risk or increase exposure and are not really meant to be used for degenerate gambling, despite this common interpretation.
Some differences in pricing and trading are usually missed in crypto derivatives contracts. For this reason,...
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