These days, crypto trading has evolved beyond simply buying and HODLing coins. Traders now have access to a wider range of trading instruments, including perpetual futures trading, often referred to as “perp trading.”
Perp trading crypto is similar to conventional futures contracts. However, it doesn’t have a fixed expiration date. Instead, perpetual contracts allow traders to predict or speculate on the price of cryptocurrencies without ever needing to settle the position.
For a beginner, perp crypto trading can be intimidating and complex at first. In this guide, we’ll break down the fundamentals of perp crypto trading and what you need to get started.
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How Perp Trading Crypto Works
At its core, perp crypto trading enables traders to speculate on the price of a cryptocurrency without having to own the asset. For instance, you can predict whether the price of Bitcoin will rise or fall without buying or owning Bitcoin in the first place.
Under perp trading, if the market moves in your favor, you profit; if it moves against you, you incur losses. Perp crypto trading also involves two key concepts: leverage and margin. Both help traders control or open large positions in the market with a smaller amount of capital.
Perp trading doesn’t have a set expiration date, and positions can be held indefinitely as long as you maintain adequate margin and manage your risk well.
Beginner Tips for Trading Perps Safely
Both margin and leverage can be powerful tools for amplifying gains in perp trading crypto. However, you must be careful since they can magnify losses just as quickly. Here are key tips to help you become a better trader.
Choose a Reliable Trading Platform
Use a reliable crypto trading platform such as Flipper with strong security, favorable fees, and good liquidity. A proper perp crypto trading platform reduces the risk of paying above-market-rate fees and unfair liquidations.
Before you start perp trading using real cash, use the demo account to practice and learn how perps work without risking real money.
Start with Low Leverage
Leverage is good and is a useful tool in perp trading crypto. However, be careful when using leverage, especially as a beginner. For beginners, we recommend using minimal leverage or even starting with no leverage at all until you fully understand how the market moves.
Manage Your Position Size
Avoid investing all your money in one trade. A common rule all traders use, whether they are trading forex or crypto perp, is to never risk more than 2% of your capital on a single trade. This way, even if the market doesn’t move in your favor, it won’t wipe you out.
Moreover, learn how to use stop-loss levels. Set your stop-loss at a level that protects your capital, not just your position.
Wrapping up
Perp trading crypto makes it easier for traders to invest in the cryptocurrency market without having to buy Bitcoin, Ethereum, or any cryptocurrency. If you are new to perp trading crypto, mastering the key concepts is important and can make a significant difference in long-term outcomes.
