Attention: the following operation is extremely risky and not suitable for people who do not know the risks involved, past returns do not guarantee future results. This is not an indication of investment, they serve purely educational purposes.
What did the operation consist of?
The transaction that followed was basically a leveraged trade in an exchange that trades bitcoin. The operation is known as future trading, in perpetual mode, that is, with no specific expiration date, in a trade of bitcoin futures contracts. The BTC asset itself is not traded, but a contract in which one party informs that it wants to pay X in the price of Bitcoin in the future, while the other party informs at the same time that it is willing to sell the same asset for X dollars. The operation took place on Bitmax Exchange
How big is this market, of futures contracts on BITMAX Exchange?
Extremely volatile, this market trades more or less daily. As of today, in the last 24 hours, the exchange had traded 322.4 Bitcoins, which, in terms of dollars is 5,763.000.00 - more five milions of dollars, ensuring liquidity for the assets traded.
What are the differences and advantages between buying or selling an asset in the form of futures and cash contracts?
When you buy an asset in cash, I pay its market price. The account amounts are immediately discounted from your spot account or portfolio balance, while the purchase in my case was subtracted from the futures balance, being also credited the amount in the futures account, when the Bitcoin price arrived at the amount that I was waiting. Some points to highlight:
The portfolio balance is transferred to the part known as futures, therefore having characteristics of the holding investing, not being traded instantly, or in the very short term, like traditional trading, an operation can take days, weeks to be effectively concluded, in the in my case, the duration was 7 days.
The purchase of contracts in the future uses leverage, in my case, according to the platform, 10x was the initial amount contributed, that is, the investor uses, through guarantees, the exchange money to operate, increasing exposure and possibilities of profits.
The assets in question can only be realized with BTC / USDT pairs, that is, you cannot trade with Bitcoin and Ether, for example.
For more details on how it works to operate on the perpetual Bitcoin contract, click here. English page.
What are the risks involved in operating future contracts?
The risks are essentially two, as far as I could locate: being liquidated, that is, losing the invested capital entirely, if the price of the target asset, in this case bitcoin loses value up to a minimum which consumes the guarantee margin. Another risk is that the operation may extend for weeks or months, if the price of the object asset remains the same or with little variation, making the maintenance fees, daily, consume the entire guarantee margin. The leveraged operation mentioned here, therefore, works only for bull market.
What were the exchange fees and restrictions?
Maintenance fees, daily, consumed by the guarantee margin, in the amount of approximately 0.03% per day, approximately, this rate varied between 0.01 and 0.005%. The withdrawal, in USDT (token paired with the same value of the dollar) is at least 20 USDT, therefore, at the current dollar rate.
The box above shows the daily fees being subtracted from the guarantee account, as the amount invested was small, these fees were around a few cents a day.
How did the operation take place within the perpetual contract platform?
Below are prints and extract of the operation: first two deposits were made.
It is noticed that on November 17, on a Tuesday, there were two deposits in Bitcoin for the futures account, in their respective values:
1st deposit: 0,00390 BTC x 16,984 dollars = $ 66,23 +
2nd deposit: 0.00142 BTC x 16984 dollars = $ 24.11
____________________________
Total: $ 90,34
Then Bitcoin was purchased in the future trading mode, which can be accessed through this link.
One of the best ways to identify that you are on the correct screen is to check the details of the contract you are negotiating in, which appears in the left corner of the screen:
The screen above is what represents a kind of ticket, from traditional markets, from stock exchange. In this case, the buy option was used at market price, and the white ball should be dragged to the desired % of allocation. your dollars in the purchase of the asset, I put between 50 to 75%. Once you click on this button, a box will appear below showing the summary of the operation. As this has already been done, I cannot print it here, but this box even lists the amount for which your operation can be settled, that is, zeroed, if the Bitcoin price has a low that suppresses your guarantee reserve.
In this case, I also set up a TP - take profit - that is, when the asset price rose 10%, it was to sell my assets in cash. As the operation was leveraged at 10X, this means that, with this increase, my initial capital would be doubled.
How did I do the profit calculation?
By means of a simple subtraction calculation, the print below which is the withdrawal amount, the only one made within the platform.
Withdrawal amount: $176.88
Profit: withdrawal amount - invested capital: $ 176.88 - 90.34 = $ 86.54
The values ??are approximate, because for the conversions of reais to cryptocurrency there are fees from the brokers, as well as for withdrawals and transfers themselves.
Another way that they can see the profit is the variation that Bitcoin had in the period, really reaching a 10% increase, between the dates of November 17 to 23, 2020, that is, going from $ 16,980 dollars to the $ 18,700 house dollars:
Conclusion
The future trading operation is very interesting because it mixes characteristics of the holding investment with the trading, that is, it mixes long and short term investments, since its assets are allocated and are automatically sold according to a previous configuration, logically this has a cost, which is the maintenance fee for the guarantee reserve, and works, in this case, for the bull market, but it has the advantage of using third party capital in order to maximize profits.
It is a high-risk investment, which should only be allocated amounts which can be “lost”. Never put “children's milk” in such an operation.
