Though a good choice for magnifying profit under the bull market, Futures trading has also revealed its high-risk nature, particularly when in extreme conditions. Then how should we avoid risks in similar circumstances? What should a novice do to increase their profit via Futures trading?
The following are 10 tips for new starters in Futures trading. Hopefully, they can shelter you from market volatility.
01 Never devote all of your assets, while there’s balance, there’s hope
In poker, going “All in” means betting your entire stack to get a bigger return. Similar to a poker game, there is also the practice of going “All in'' in the crypto world. “All in” may lead the way to financial freedom, but is also incredibly risky.
The leverage of futures can not only magnify profit but also increase risks, especially when facing large volatility. As such, going “All in” would be very likely to turn what you have into nothing. Please always bear this in mind and never devote all of your assets!
02 Avoid 100x leverage, it is never the right choice for a novice
Another danger for novices is the use of high leverage, especially the 100x one. 100x leverage allows you to magnify the value of your position to 100 times. However, if you trade the wrong side, the position is very likely to be liquidated even when there is only 1% of price volatility. 100x leverage is never the right choice for newbies lacking trading experience. KuCoin Futures suggests all users start from low leverage and accumulate experience first.
03 Think critically, a blind deal makes nothing
It is common for novices to follow experienced investors. However, in the crypto world, it is more important to cultivate your own style of investment. Futures trading is indeed a highway to financial freedom, but it is never a shortcut. What you need is to learn from experience and foster your own trading mechanism.
04 Use “Stop loss” to keep your assets away from liquidation
One of the most common mistakes that novices make is forgetting to set “Stop loss”. Some of them may not even know what it is. Stop loss is not only an essential way to avoid liquidation but is also a good method for managing your position. Especially when facing extreme volatility in the Futures market, it can help you to control the losses within a proper range. So next time when you want to trade Futures, please first set “Stop loss”.
05 Improve your trading strategies rather than burying yourself in market dynamics
Market analysis tools and technical indicators are assistants for better decision-making. However, you shouldn’t rely on them too much. Sometimes, even though you’re using tools or indicators for guidance, you may find that things turn out to be totally different. The only thing you can rely on are your own strategies fostered on experience. Improving your strategies is the only way to keep you earning from the markets.
06 Make decisions based on your own foresight, the Exchange will not interfere any trade
Futures trading is fair and impartial to everyone, so whether you can profit from it or not is totally determined by your trading decisions and strategies. Therefore, a highly disciplined habit would help guarantee the strict execution of your trading. No one can help you to trade but yourself.
07 Stop when you are already taking profit, don’t lose the greater for the less
While opening a position is the first step of a trade, it’s only when you close it that the money arrives back to your pocket and it can be considered a success. It sounds easy to get the deal done, but as buying the DROP and selling the RISE has become normal in the crypto world, knowing when to stop profiting and sell has become the most essential part that a trader should know about.
If you want to reap more profits in the risky futures market, then you need to remember that one bird in the hand is worth two in the bush. To stop at the right place does not mean you lose. On the contrary, it is the most cunning strategy that one should remember.
08 Learn constantly to earn consistently
No matter if you're in the crypto world or in the stock market, a good return on investment comes from good methods rather than just going all in blindly or being overcautious. To profit from trading, one must invest time into their trading skills and capabilities. You should not only learn from different perspectives but also learn more about the fundamentals of trading. All of these endeavors will sharpen your judgment of the market. Knowledge is power!
09 Give your brain a break to keep a sober eye on market dynamics
For all 365 days of a year, not every day is good for trading. It’s better to do nothing than to make mistakes. So just sit back, go hang out for a while, then calm down and think about what to do next. A clear mind will increase your sensitivity to the changes in the market, and a strict logic for investment will harvest you more profits.
10 Start from scratch: Futures Brawl -> Futures Lite -> Futures Pro
Want to level up quickly? Start with Futures Brawl! To familiarize newcomers with futures trading, KuCoin Futures has rolled out Futures Brawl, which is more like a game. Traders can compete with users globally by going long or short to experience futures trading and harvest profit.
By experiencing Futures Brawl, you will have a basic understanding of what futures trading is; By trading from Futures Lite to Pro, you will gradually form your own trading style and strategies and will soon become an experienced investor!