Understand the bases of future cryptocurrencies and the premium

While the cryptography market continues to evolve, cryptocurrency trade can be a high-risk and reward company. Among the different types of contracts available on these platforms are ultimately, which offer traders the potential for significant profits or losses if they are not executed correctly.

In this article, we will immerse ourselves in the world of future cryptocurrencies and explore the concept of bonus on cryptographic markets. We will also discuss the way of understanding this critical aspect of the trading of cryptocurrencies.

What is a Crypto’s term contract?

A cryptocurrency in the long term contract allows buyers and sellers to agree on a price for a specific quantity of cryptocurrency on a future date, known as “strike” or “expiration”. The difference between the price of the offer (buy) and the prices (sell) represents the premium, which can be a profit if it is executed properly, that is to say a loss, otherwise.

How does the premium work?

Imagine that you buy 100 Bitcoin units at $ 10,000 with a long -term contract that expires in six months. The price of the offer is set by the stock market, and it is currently $ 9,500 per unit. However, there are also sales orders at this price, which can be filled for $ 9,800 or more. In this scenario:

• BID PRIUM: The difference between the offer ($ 9,500) and ASK ($ 9,800) is a bonus of $ 300.

• Ask the premium:

  

  If you are ready to sell 100 units to $ 10,000, your sales order would be filled with $ 9,900, which would result in a $ 200 request bonus.

Types of bonuses

There are two main types of bonuses:

• Market Order Premium : This is the difference between the offer and the prices ask at a given time. It is essentially the propagation created by market forces.

• Zero-SPREAD Premium : In this scenario, the prices of the offer and the requests coincide, which has not resulted in any premium.

Factors affecting the premium

Several factors may have an impact on bonuses on term contracts on cryptocurrency:

* volatility : higher volatility causes higher bonuses due to the increase in commercial activity.

* Trading volume : more active market players increase bonuses because they compete for better trades.

* Order flow : imbalances in the order flow between purchase and sale orders can create premium disparities.

How to avoid negotiating with Premium

To alleviate risks, traders must be aware of the following strategies:

• Use stop orders : Define a price price to limit potential losses.

• Diversify your portfolio : Divide your risks on several cryptocurrencies and market types.

• Monitor market conditions

  : Adjust your trading strategy according to the evolution of market conditions.

Conclusion

Understanding the premium on the cryptocurrency markets is essential to make informed commercial decisions. By entering the basics of term contracts, you will be better equipped to sail in these complex financial instruments. Do not forget to remain disciplined and adapt your strategies as market conditions are evolving.

While the cryptography market continues to grow and mature, it is crucial to remain educated on the subtleties of the premium in order to maximize potential gains while minimizing losses.