Evaluation of the risks of lever trafficking in Permanent Futures: Warning history
The world of cryptocurrencies has seen a significant increase in popularity in recent years and many investors have immersed themselves in digital names such as Bitcoin and Ethereum. A way to participate in these markets is to exchange with permanent futures that allows traders to buy or sell contracts at all costs they choose. However, with great power, there is a great risk, especially when it comes to the use of trading. In this article, we will evaluate the risks of negotiation in permanent futures and provide a guide for investors who wish to participate in these markets.
What is trading with lever effect in permanent future?
The use of permanent futures traffic includes a purchase or sale contract that allows traders to control multiple financial units than they actually have. This means that if the price of the underlying activities is moved against the trader, it could lose a significant part of its initial investment. In the case of the permanent future, the effect of the lever is usually 5: 1, which means that for each $ 100 exchanged, the size of the trader’s position would be $ 500.
Risks of lever traffic in Permanent Futures
Although the leverage trading can provide high returns, significant risks also presents itself. Here are some key risks to consider:
- This means that traders can try to sell their positions quickly or at a reasonable price.
- Risk of volatility : Permanent future are designed for high frequency trading and is usually exchanged on intraday markets. However, this also means that prices can move rapidly and operators must be prepared for unexpected prices fluctuations.
- If these market creators are not able to guarantee sufficient liquidity, prices can become volatiles and operators can lose control of their positions.
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Examples in the risks of real life of lever trafficking
Several examples illustrate the risks associated with trading with permanent future lever effect:
- Futures Bitcoin:
In 2018, future bitcoins were listed in the Chicago (CME) merchant Exchange (CME) and Intercontinental Exchange (ICE). However, there was a remarkable accident when the trader was not able to sell its position quite quickly, with consequent considerable losses.
- Futures Ethereum:
CME began Futures Ethereum in December 2020. The platform had problems with liquidity, which led to the company stop stops and significant losses for traders.
Risk risk with correct corporate strategies
In order to minimize the risks associated with trading with lever effect in permanent future, it is necessary to use the right business strategies. Here are some key suggestions:
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- Using the positioning of the position
: the use of the position size techniques can help control exposure and reduce the risk.
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