What is Contract Trading (What are the Trading Techniques of Contract Trading)?
What is contract trading? What is contract trading? We know that futures and opt
What is contract trading? What is contract trading? We know that futures and options are common products in the cryptocurrency market, but the main difference from traditional financial markets is: one is derivatives of digital assets represented by Bitcoin.
Ethereum is a smart contract platform based on blockchain technology, which achieves automatic execution through pricing and risk management of digital assets.
In traditional stock investments, investors can buy and sell various commodities (such as stocks) and then choose products or services that suit their specific needs without the support of any other third-party institution. When the volatility of a product is large, the prices of these products will rise; however, if the price of an underlying asset fluctuates greatly, a certain margin needs to be paid, resulting in losses.
Therefore, contracts, as an investment tool, can meet the different needs of different users: the balance of purchasing power among multiple groups such as buyers/sellers/investors, and the increase in hedging capital.
For example, if someone holds 1 Bitcoin and transfers it to another user, it can be exchanged for another coin. In this way, even without the participation of large investors, some profits can be earned, and due to the continuous decline in Bitcoin prices, arbitrageurs cannot make profits. Therefore, contract trading can be divided into two types:
The first type is spot delivery contracts, which do not require exchange matching at the current stage but are completed by professional teams.
The second type is derivative contracts, which require both parties to have corresponding positions and leverage ratios to judge market trends and avoid investment losses caused by price fluctuations.
The third type is decentralized derivatives. This type of futures contracts have very complex rules, involving many types including but not limited to new projects or new players in the market. Currently, mainstream varieties such as EOS and BCH have been launched on the market, and more varieties will be available in the future.
What are the trading techniques of contract trading
According to Mars Finance, the total market value of the global contract trading market is currently $2.91 trillion. According to Huobi China’s data statistics, the annual contract trading volume in 2019 has exceeded $300 million; the cryptocurrency futures market in 2018 also reached a historic high of $1.5 trillion. In addition to technological factors, the most important factors are the high utilization of funds and strong risk control capabilities, which reflect the basic nature and advantages of contract trading. So, what are the trading techniques for contract trading?
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