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Derivatives in crypto: how to profit from volatility (but be careful)
Derivatives are essentially pairs on the price movement of an asset without the actual asset. Sounds strange? Let's figure it out.
What types are there?
Futures - the most popular. You agree to buy/sell BTC in a month at a certain price. If you guessed the direction - you got rich, if not - you lost money ( and even more if you took a loan ).
Options - gives you the right, but not the obligation. You bought an option on BTC for $90k, and the price jumped to $95k? You take the profit. The price fell? Just don't exercise the option.
Swaps - exchange of payment flows. For example, exchanging BTC for ETH at a fixed price, whoever ends up with more.
Why do people trade them?
Volatility in crypto is a gold mine for derivatives. In a day, BTC can jump by 10%, in an hour by 5%. Derivatives allow you to profit from these price movements without a large initial capital - through leverage.
But this is a casino?
Twice so. Derivatives are one of the riskiest ways to trade. Beginners better first understand the basics of the spot market than to throw themselves into this abyss.