5 Best Crypto Perpetual Futures Trading Strategies

Crypto trading might seem a bit overwhelming at first glance. But with the right strategies and action plans, you can easily navigate the world of crypto. And since crypto is here to stay for a long time, having effective strategies can help you maximize your potential gains in the perpetual future. 

In this article, we will be discussing the top five strategies you can follow to increase your profit margin.

Top 5 Strategies for Perpetual Future Crypto Trading

Directional Trading

A popular strategy for beginner traders, directional trading is a highly accessible entry point. This strategy involves predicting the rise or fall of an asset and trading according to the predictions. This prediction can be made for both short and long periods of time. 

The crypto market often experiences strong directional moves, mostly caused by sentiments, adoption news, or macro events. However, incorrect directional bias can result in losses. The strategy is not perfect and can be vulnerable to sudden shifts in market sentiment. 

Breakout Trading

An intermediate-level strategy, breakout trading aims to capture strong price movements when the market breaks out of consolidation zones, support, or resistance levels. A breakout above the resistance level may signal bullish momentum, while a breakout below the support might indicate a new downward trend. 

This strategy is planned by mapping out the support and resistance levels, watching the market for confirmation, and acting quickly when the breakout happens. If entered late, the price may already be overextended, and an early entry may result in brief movement in the price.

Scaling 

An intermediate-level future trading strategy, scaling involves adjusting the position size over time. If the adjustment is gradually entering a trade, it is called scaling in, and if it is exiting in parts, it is called scaling out. This strategy helps in reducing the risk exposure during the volatile market conditions.

Scaling down is often used to manage risks through reducing the portion size when the price is unfavorable. Scaling lets the inventors turn average into a better price, especially when the market is still in a navigatory phase. It can also help to lock in gains while keeping exposure if the trend continues. 

Hedging

Hedging is used as a risk management strategy to protect the existing positions from excessive price movements. This method, through opening a directionally opposite short position, can reduce the potential impact of the decrease in price of the assets bought and held.

Hedging is carried out not to generate profit, but to minimize the losses if the market moves away from the original position. This strategy is often used to guard the assets against short-term price fluctuations. However, if the market is moving in a favorable direction, hedging can also cause a reduction in the potential upside. 

Scalping

A top strategy used by advanced traders, scalping involves opening and closing positions to gather multiple small profits from minute price movements throughout the day. Trades usually last from a few seconds to several minutes. Scalpers make many trades per session, accumulating small profits that add up over time.

The volatile nature and high liquidity of the crypto market makes the strategy ideal for short-term price fluctuations. However, trading increases the fee requirements and emotional fatigue, and scalpers should have discipline, avoiding overtrading, and use tight stop-losses. 

Final Thoughts

Perpetual future trading of crypto offers a vast opportunity, but it is not devoid of risks. The long-term success lies in choosing the right strategy that matches your experience level, tolerance to risk, and trading style. 

Beginners may follow strategies like directional trading and breakout trading, while active traders can try to work out strategies like scaling and hedging. Advanced traders may explore strategies like scalping for diversified returns. 

Regardless of the strategy opted for, risk management is unavoidable. Ensure to practice stop-loss orders, avoiding overleveraging, and not risking more capital than you can afford to lose. Not just these five strategies, but there are other strategies as well that traders can apply to improve their chances for profit from crypto investments.