RATE Group | How to Trade Bitcoin Using Leverage and Not Worry About Liquidation
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How to Trade Bitcoin Using Leverage and Not Worry About Liquidation

01 Apr How to Trade Bitcoin Using Leverage and Not Worry About Liquidation

Posted at 08:29h in Bitcoin News by

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Institutional traders have long known the benefits of derivatives trading, including leverage and hedging. By trading options markets, one can predetermine maximum gains and losses, even with volatile assets like Bitcoin (BTC). 

Despite being far more complex, such instruments allow traders to generate gains independent of what happens over the next weeks or even months, which is essential for traders’ peace of mind to achieve optimal performance.

Retail traders have only recently begun using derivatives, although they have focused almost exclusively on futures contracts offered by BitMEX, OKEx, Binance and so many others. The main problem here is liquidation risk, as cryptocurrencies are incredibly volatile.

Buying a call option? Here are the costs and benefits

The buyer of a call option can acquire Bitcoin for a fixed price on a predetermined date. For that privilege, the buyer pays an upfront premium for the call option seller. Contracts have a set maturity date and strike price…

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