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understanding the concept of a first term in cryptocurrency trading
The world of cryptocurrency trading is an environment with high problems and fast pace in which traders are constantly seeking to maximize their profits. A key concept that can have a significant impact on the success of a trader in this field is the term. In this article, we will immerse ourselves in what is the first futures, as it works and why it is essential for the successful trade of cryptocurrencies.
What is the first first?
The first futures, also known as Spread or Bid-Ask bonuses, refers to the difference between the price of a basic asset (such as a cryptocurrency) when it is sold at expiration compared to its cash price. This concept comes from the fact that buyers and sellers in the term market are not always prepared to pay the same price for a contract with an unlimited duration.
How long -term premium works?
Imagine changing Bitcoin -term contracts, which represents the property of a certain amount of bitcoin at a specific date in the future. The buyer pays a premium to buy this contract, which means they pay more than their nominal value (cash price). Instead, the seller receives less than their nominal value, as they have to buy or sell the basic asset before expiration.
The long -term market is based on the bidding premiums, where buyers and sellers are ready to pay different prices for the same asset contracts. The buyer’s bonus is generally higher than the price of the cashier of the asset, while the seller’s first is lower. This creates a bizarre spread, which may vary depending on factors such as market demand, supply and volatility.
Why are the contracts on the term of cryptocurrency trading?
In the cryptocurrency markets, the term bonuses play a crucial role in determining commercial decisions. Here are some reasons why:
- Price discovery : The first term helps the traders to understand the prices of an asset before making their own transactions. Analyzing the spread, traders can have an overview of the market feeling and potential price movements.
- Risk management : Understanding the bidheads-asask allows traders to effectively manage their risk. For example, if a trader knows that a particular contract is too expensive, he can choose not to buy it or sell it immediately, minimizing potential losses.
- Development of translation translations : The first term helps traders to develop effective negotiation strategies by identifying areas with high demand and a low market offer. By anticipating these trends, traders can be positioned for profitable transactions.
- Square sensation : Offering bonuses can indicate market feeling, such as investor confidence or market fear. Traders who can effectively analyze these premiums can get valuable information about market psychology.
Examples of long -term bonuses in cryptocurrency trading
To illustrate the concept, consider a few examples:
- Bitcoin future with a high first
: If the long -term price of Bitcoin is 10,000, and the cash price is about 9,500, a trader could buy a contract with an expiration date in two weeks for 5 dollars per unit (premium). He should sell his existing bitcoin or buy it before the expiry date to fulfill this obligation.
- Bitcoin future with a low premium : If the long -term price of Bitcoin is 8,000, and the cash price is about 7,500, a trader could buy a contract with an expiration date in two weeks for 3 dollars per unit (premium). He should sell his existing bitcoin or buy it before the expiry date to fulfill this obligation.
Conclusion
In conclusion, understanding the concept of a first terms is essential to be successful in the trading of cryptocurrencies. Analyzing the offer bonuses, traders can better understand the market dynamics, manage the risks and develop effective negotiation strategies.
