Even experienced traders have struggled with bitcoin trading, which has grown fast in popularity. Explore how bitcoin exchanges have reinvented financial market trading instruments and developed new profit techniques.
With a lure equivalent to the gold treasures of El Dorado, cryptocurrency trading has become one of the most captivating and talked-about financial activity in less than ten years. But even for experienced traders, trading bitcoins proved to be a challenging undertaking. Cryptocurrency exchanges have been hard working to master standard financial market trading instruments over the past five years, reinventing them and putting forth fresh ideas to increase the profitability of crypto trading.
Swap trading
Spot trading is the king of all exchange features in the world of cryptocurrencies. The order book mechanism was used by the initial cryptocurrency exchanges’ core feature, spot trading, which allowed users to purchase and sell assets.
Spot trading refers to buying and selling an asset for immediate delivery at the current market price. As more orders are issued, the market becomes more liquid as a result of the internal system of trading platforms that matches bid and ask prices.
“The initial step in cryptocurrency trading is spot trading. According to Gracy Chen, Managing Director at Bitget, one of the biggest cryptocurrency exchanges in the world and ranked third in terms of liquidity, most individual investors begin trading cryptocurrencies with easy steps – buy one coin, sell it when its value increases, and so on.
She said that if you’re new to trading, it’s essential to familiarize yourself with the features of your preferred platform before getting started. In order to get a true sense of the market, it is advised to practice spot trading in a simulated setting, such as TradingView Paper Trading. When choosing a platform, it’s crucial to consider the various order types, such as limit and stop orders, as well as the amount of trading pairs.
Derivatives
Derivatives are intrinsically tied to underlying assets. Cryptocurrency derivatives are closely tied to Bitcoin and ETH. When one holds Bitcoin or ETH directly, derivatives trading is cheaper and more effective than spot trading.
The main reason to research crypto derivatives is that they improve risk management and speculation. Traditional financial market traders often invest in bitcoin derivatives.
“More seasoned traders already use derivatives as a tool. They are rarely used by beginners, which is a bad option. The more effective risk management is made possible by crypto derivatives. They give traders access to a variety of digital assets without actually owning them. The future value of a particular cryptocurrency can be speculated upon via derivatives, according to Gracy.
She claims that the demand for trading in derivatives is increasing at an unheard-of rate. However, the collapse of FTX in 2022 dealt a serious damage to the cryptocurrency derivatives industry. Thus, 24-hour Open Interest on the top 10 derivatives exchanges declined by 40% from its peak in December 2022.
However, several bitcoin derivatives trading platforms increased their market share. Bitget was the only exchange to increase its derivatives market share from 3% to 11% and Open Interest from $800 million to $3.74 billion.
Swapping copies
The newest cutting-edge investment strategy, known as “copy trading,” is imitating the trading positions of other investors, also known as “professional traders” or “experts.” Users can imitate elite traders’ orders in related markets by using copy trading. Users consent to copy the trades of professional traders and track their every move.
The expert traders who reveal their tactics and the novice traders who copy their actions both benefit from copy trading. Naturally, selecting a seasoned trader whose transactions should be imitated will require some time.
Followers of skilled traders should review portfolios and prior outcomes, including PnL, win rate, and AUM. This understanding helps them choose a trader’s approach that meets their profit and risk expectations.
Bitget was the first cryptocurrency exchange to offer copy trading in May 2020. It offers futures, spot, and strategist copy trading. Bitget leads cryptocurrency copy trading with over 80,000 traders and 380,000 copy traders.
According to Bitget Managing Director Gracy Chen, “Copy trading is the solution to many of the major pains of crypto trading.” Most cryptocurrency traders are rookies who try their luck in hopes of getting quick Xes but make emotional judgments in real trading and are upset by losses. Some traders can’t keep up with the market. If time or knowledge are scarce, copy trading can help a deal.
The right exchange determines a trader’s market success. A reliable and effective platform is essential for successful trading.
Thus, analyzing possible exchanges’ strengths and weaknesses is crucial to a trader’s performance. These include trading tools.
Consider the exchange’s security, liquidity, fees, history, markets, and user experience before choosing. Finding the finest cryptocurrency exchange is hard work, but it pays off.
