Strategies for becoming a professional trader

New investors might think that professional traders spend most of their time staring at screens day and night and analyzing the market, choosing the best deals but that’s not the case.

Having a clear eye is not what distinguishes the top trader from the average trader, but it is the application of tried and tested strategies to deliver the ability to remain positive in time. long. Today, the article will discuss how to trade futures spread, sponsorship rates and the use of trailing stops that are of great interest to top traders.

Each of these simple strategies does not involve an exclusive trading bot or a substantial margin, meaning the investor doesn’t need large trade balances to make a profit.

The strategies are not oriented

The crypto market is known for its flashy price action, which involves many assets rising or falling two to three digits in a 1 to 24 hour period.

Investors are lured by the ability to make excellent returns, so it sounds crazy to propose just asking for a 2% monthly increase in cryptocurrencies.

Why does an investor participate in such a “low yield” strategy? The answer is compound interest. If a trader can achieve 2% per month their annual gain is equivalent to 27%.

Very few traders can consistently achieve this level of return by trying to guess the market’s highs and lows. Hence, getting more reliable returns will keep players from the stress of potential losses and the almost impossible task of trying to correct the market.

One great strategy is called carry trade, which involves buying crypto on traditional markets and selling it through its fixed monthly calendar futures contract.

This rate can be measured by analyzing the underlying indicator also known as the futures market annual spread.

Annual 3-month basis indicator of ETH futures | Source: Skew

This is not a fixed trade as the underlying indicator fluctuates depending on how bullish investors are. Usually, there is more opportunity for altcoins because of less competition.

Observing the chart above, notice how the underlying indicator of ETH hit 20% annually in mid-August. But, there is one thing to look out for. This transaction will only work if the crypto is collateralized like the cryptocurrency is shorted via futures contracts. Some derivative exchanges will only allow you to deposit Bitcoin or USDT as collateral.

It is important for investors to remember that unlike perpetual futures (reversal swaps), fixed-calendar futures have a predetermined expiration date. Therefore, it is necessary to sell the spot position at the time of liquidation of the futures contract.

Sponsorship rate transactions

Another type of non-oriented trading is an option strategy, which often involves a variety of futures and futures.

For example, the funding rate mining and trading will be less risky. Permanent contracts (reversal swaps) will charge a long or short fee, depending on the leverage imbalance. Those exchanges release estimates for their next funding report, usually every 8 hours.

When this rate goes up, a professional trader shorts the futures contract and buys it simultaneously on the spot exchanges. Hence, the risk is fully hedged, collects a sponsorship ratio, and revert the transaction right after.

Automated trading is equivalent to success

Sometimes there are not many risk-free trading strategies available. In situations like these, even professional traders might consider taking directional risk. What sets them apart from inexperienced traders is the use of automated trading.

Most traders know how to use stop-loss orders, which is a good thing but not what creates a chance of winning. This tool can be used to initiate trading, especially if a trailing stop is used.

Binance Futures Trading Platform | Source: Binance

In the example above, buying with this trailing stop (long) has an trigger price of $ 12,900. Therefore, when the market is trading higher, this order is inactive.

Once Bitcoin reaches that level, the order will only buy after a 0.8% increase (rate of return). Hence, it automatically buys as soon as Bitcoin rises $ 103 from the lows.

This strategy is often used by professional traders to automate the investment process and greatly reduce the need to check prices 24 hours a day.

Thus, to become a professional trader, the player should practice and master 3 strategies: trading futures, profit from the sponsorship rate and buying using the stated trailing stops. on. Focus on learning non-option and option trading strategies and free yourself from guessing the market’s highs and lows.

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