Futures
Futures Trading in this Wiki's context usually refers to Perpetual Futures, a thing that takes away your futures.
| ⚠️ Disclaimer: | The information provided in this text is for educational and informational purposes only. These writings are my own opinion, provided as-is, and has no warranty expressed or implied. None of it is financial, legal, or other professional advice. The author encourages readers to use discretion and make informed decisions regarding their own practices while seeking professional advice if necessary. |
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Futures trading, the latest trend in the world of finance, where you can trade your futures away with just a few clicks. Yes, that's right folks, the world of finance has once again come up with a new way to make you lose your hard-earned money.
Ladies and gentlemen, meet Futures trading, the king of leverages. It's like a rollercoaster ride, only this one doesn't come with a seatbelt. You invest your money in a volatile asset, and the traders will make sure that you'll be screaming all the way down. It's like a game of Russian Roulette, but instead of a bullet, it's your money that's on the line.
Think of it this way, if you have $10,000 and you trade futures, you can trade up to $1,000,000 with 100x. Sounds too good to be true? That's because it is. The problem is that when the market goes down, you'll be the one left holding the bag. And trust us, it's not a pretty sight.
But don't worry, the traders will be there to offer you a shoulder to cry on. "Hey man, it's just the market. It's not our fault." Yeah, right.
So what's the solution? Education, my friends. The more you know, the better equipped you are to make informed decisions. Don't let the traders trade your futures away. Take control of your financial future and educate yourself.
And now, for the disclaimer: This article is a work of satire and should not be taken seriously. Futures trading is a high-risk investment and is not suitable for everyone. Please experiment leverage on a demo account before making any investment decisions. You can now proceed with the reading.
Leverage
Leveraged futures offer traders the tempting opportunity to multiply their rewards, but they also increase the risk of a sudden and painful bite. This table compares various leverage levels, highlighting the potential dangers that come with higher stakes if you deposited $100:
| Leverage | Control Position Size up to | % Price Movement for Liquidation |
|---|---|---|
| 2x | $200 | 50% |
| 5x | $500 | 20% |
| 15x | $1,500 | 6.67% |
| 20x | $1,750 | 5% |
| 25x | $2,500 | 4% |
| 100x | $10,000 | 1% |
| 125x | $12,500 | 0.8% |
The table above demonstrates how the slippery snake of leveraged futures becomes more treacherous as leverage increases. With each step up the leverage ladder, the required price movement for liquidation shrinks, raising the stakes for traders.
At lower leverage levels like 2x or 5x, the risks are relatively manageable. However, with 25x, 100x, and even 125x leverage, a tiny price movement of just 1% or 0.8% can lead to liquidation, leaving traders to question the wisdom of dancing with such a slippery serpent.
In conclusion, while leveraged futures can be enticing, traders must remain vigilant and respect the dangerous nature of the game. It's crucial to understand the potential consequences and tread carefully to avoid a nasty bite from the fangs of liquidation.
As a game of Chicken
The concept of a "game of chicken" can also be applied to trading derivatives. In this scenario, traders are essentially playing a game of chicken with each other, hoping that they will not be the first one to liquidate their position.
Crypto futures trading can be incredibly volatile, and traders who take on large positions are essentially betting that the market will move in a certain direction. If the market moves against them, they risk being liquidated and losing either their margin as collateral or their entire account balance.
Liquidation is essentially the point at which a trader's position is automatically closed out due to a lack of margin. This means that the trader's losses are locked in, and they are out of the game.
In this sense, trading crypto futures can be seen as a high-stakes game of chicken, where traders are constantly testing each other's resolve and trying to avoid being the first one to flinch. The outcome of this game is determined by a complex interplay of economic factors, market sentiment, and human psychology.
Pros & Cons
Pros
- Diversification: Futures trading allows investors to diversify their portfolio by investing in a wide range of assets, including commodities, currencies, and stock indices.
- Leverage: Futures contracts typically offer high levels of leverage, meaning that traders can control large positions with relatively small amounts of capital. This can increase potential returns, but also increases the risk of loss.
- Liquidity: Futures markets are highly liquid with billions of USDT turnover each day; this translates to your trades can be executed quickly and easily.
- Price discovery: Futures trading helps to determine the spot price of an underlying asset by providing a market for buyers and sellers to meet and agree on a price.
Cons
- It Takes Away Your Futures: One of the biggest risks of futures trading is that it can lead to the loss of your entire investment. This is because futures contracts are highly leveraged, meaning that you can control large sums of money with a small investment. However, this also means that a small change in the price of the underlying asset can result in significant losses.
- Volatility: Futures markets are highly volatile, which means that prices can fluctuate wildly in a short period of time. This can lead to significant losses if the trader is not prepared for the volatility.
- Complexity: Futures trading can be complex and difficult to understand, especially for inexperienced traders. This can lead to poor investment decisions and significant losses.
- Margin requirements: Futures trading requires traders to have significant amounts of margin available in order to cover their positions. If the value of the underlying asset falls, the trader may be required to deposit additional funds to maintain their margin requirements, which can lead to significant losses and/or Liquidation.
Doctor Strange's Analysis
In the world of Doctor Strange, the Sorcerer Supreme relies on his trusty spellbook to cast magic and protect the world from mystical threats. However, the spellbook is not just a collection of spells - it also includes warnings and cautionary tales about the consequences of using magic recklessly.
This is similar to the world of futures trading, where investors can make large profits by speculating on the price movements of volatile assets. But like magic, futures trading can have serious consequences if not approached with caution and a clear understanding of the risks involved.
Just as the spellbook warns about the dangers of dark magic and the consequences of misusing spells, so too does the world of finance warn about the dangers of leveraged trading and the consequences of taking on too much risk.
While some may view futures trading as a form of black magic, the truth is that it is a complex and sophisticated financial instrument that requires a deep understanding of the markets and the economy. And like magic, the best weapon against the dangers of futures trading is education and a clear understanding of the risks involved. Never put up all your collateral as a margin as you might have no wiggle room before getting liquidated.
So whether you're a sorcerer or a futures trader, always remember to approach your craft with caution and be aware of the consequences of your actions. And always seek out the wisdom and advice of experienced practitioners, because knowledge is your greatest weapon.
MoNoRi-Chan's Quote
MoNoRi-Chan's comparison of BTC to a betting lounge in Vegas back in 2018 was an astute observation of the speculative nature of cryptocurrency trading. At that time, people from all over the world were actively trading cryptocurrencies, much like gamblers in a casino, hoping to profit from the price movements.
Fast forward to the current years, the rise of crypto perpetual futures has intensified the speculative nature of cryptocurrency trading even further. While CZ doesn't uses them, but he allows traders to shovel themselves up to 125x leverage, traders can take on highly leveraged positions, amplifying both potential profits and losses. This has led to the emergence of a risky trading environment, akin to an online casino; where individuals can "grab a shovel" and dig themselves into deeper financial trouble if they are not cautious.
The metaphorical reference to digging one's own grave emphasizes the inherent risks associated with high-leverage trading in the crypto market. Just as in a casino, where one can easily lose more than they initially put in, trading with high leverage in crypto perpetual futures can result in significant losses if the market doesn't move in the anticipated direction.
MoNoRi-Chan's observation highlights the importance of exercising caution and responsible risk management in the world of cryptocurrency trading. While the potential for significant gains exists, so does the potential for devastating losses. Traders need to be aware of the risks involved and approach trading with a level-headed and informed mindset, rather than succumbing to the allure of high leverage and speculative bets.
