Developing Your Trading Strategy for Perpetual Swaps

Developing Your Trading Strategy for Perpetual Swaps
Developing Your Trading Strategy for Perpetual Swaps

Trading in perpetuals without a strategy is like sending an unguided missile to space. Whether one is a new trader or a seasoned one it is pertinent to draw an entry and exit strategy on trades to ensure risk mitigation and a higher potential of making profit with perpetual trades.  

Some metrics that traders must consider before chalking on a trading strategy.  

Trading Capital: Make sure to set aside some capital for trading in perpetuals. It is important to allocate your funds according to your risk appetite.  

Don’t lay all your eggs in one basket: An ancient saying in the world of finance, this holds true even today. It is important to keep your cryptocurrency investments and trading capital as separate things. 

Earning targets: Trading is different from investing. Usually, a trader has a specific profit mark that he wishes to achieve through picking the right trades. It is important to evaluate one’s earning targets, duration of trades, and the margin/ collateral that one intends to use amongst other things.  

Calculating Net Profits: Trading perpetuals is not free. Usually, trading platforms charge a fee to ensure that there are enough market makers to maintain liquidity on the platform. When calculating one’s PnL make sure to check for any other charges.  

Besides platform fees, understand the network fees that one must pay for withdrawals. If the network fee of a particular cryptocurrency is high, one can convert the crypto into another through spot trading and withdraw funds without having to pay high network fees.  

Easy Perpetual Trading Strategies for Beginners 

Scalp trading: Scalp trading involves a trader entering into short-timed trades and making a profit. In scalp trading, a trader enters a long or short position and squares off the contract on small price movements. Scalp trading can be profitable for traders with large and small margins.  

However, when trading with small margins the earnings from each trading session is also comparatively less. Traders with small margins usually take advantage of available leverage and take multiple positions to make a good enough profit. This approach may consume more time, but it is less risky as traders make quick moves on the contract positions.  

Range trading: This approach involves traders marking the day’s high price and low price of a cryptocurrency. As the name suggests, traders use the candlestick price chart to identify the high and low ranges of an asset. Traders take these price points and place long or short positions accordingly.  

Automated trading strategy: When we say automated trading it doesn’t mean algorithmic trading but trading with set limits. Traders who enter a trade position at a limit price can get better profits. Additionally, setting a take profit limit and stop loss limit helps the trader in letting the trade take its course.  

Wrapping up 

“A goal without a plan is just a wish”, Antoine de Saint-Exupéry, The Little Prince. As a trader, you may have your set goals in trading perpetuals. To achieve these goals, it is pertinent to plan your trading strategy. 

Personal Note From MEXC Team

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