the most common errors to avoid while trading bitcoin futures markets

In particular, when it comes to trading cryptocurrency futures on exchanges that are not part of the traditional financial system, many traders frequently voice some really significant misconceptions. The most frequent errors relate to the price decoupling of futures markets, fees, and the effect of liquidations on derivatives instruments.
Let's look at three straightforward blunders and misunderstandings that traders should steer clear of while dealing with crypto futures.

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Contrary to popular belief, futures contracts and other derivatives are not actually intended to be used for pathological gambling but rather to decrease risk or increase exposure. In most crypto derivatives contracts, some differences in price and trading are missed. Because of this, traders considering entering the futures markets should at least take these distinctions into account. Before using leverage, it's critical to comprehend the idiosyncrasies that currently exist because even knowledgeable investors in traditional assets' derivatives are susceptible to making blunders. Even though they offer USD rates, the majority of crypto trading firms do not really use US currency. This is a significant unreported fact and one of the traps that derivatives traders encounter that increases risks and distorts the analysis and trading of futures markets. Clients don't truly know if the contracts are priced in stablecoin due to a significant issue with transparency. The intermediate risk that exists when using centralized exchanges, however, should not make this a serious problem.

Since the recipients of a derivatives contract will not receive the award, airdrops can also result in discounted futures prices. However, this is not the only scenario that could lead to a decoupling because every exchange has its own pricing structure and risks. For instance, Polkadot quarterly futures have been trading cheaper than DOT price on spot markets on Binance and OKX. Trading targets and entry levels must be adjusted if using quarterly markets because the futures contract price has become independent of spot exchanges.

Despite the fact that traders are aware of the additional expenses and advantages associated with employing a futures equipment, an unknown component usually only surfaces under erratic market conditions. Liquidations are typically the reason why a derivatives contract decouples from the ordinary spot exchanges.
A built-in mechanism on the derivatives market ends the position when a trader's collateral stops being enough to cover the risk. The price movement brought on by this liquidation mechanism could be erratic, leading to a changing from the index price.

Uninformed investors may respond to price variations that only occurred in the derivatives contract, even though these distortions won't lead to any more liquidations. To be explicit, the reference index price is calculated by the derivatives exchanges using external pricing sources, typically from ordinary spot markets. These distinctive procedures are not flawed, but prior to utilizing leverage, all traders should take them into account. When trading in futures markets, it is important to consider price decoupling, increased costs, and liquidation impact.

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