In this article, I want to introduce crypto derivates with a comprehensive guide about how to use them to earn! So let’s start with some basic knowledge…
What does ‘‘Crypto Derivatives’’ Mean?
The only way to have crypto income is not creating some content, using your entourage as referral income, or managing a crypto community. Even with a little cash and some time, you can gain huge money while trading crypto assets. Basically, trading is imagined as ‘buy the dip, sell the top’ or ‘buy the news, sell the reality’ for many people. This imagination is theoretically true but it’s not clear how many of us can apply that simple theory while trading. So it leads to improper decisions and loss of funds.
The basic scheme is like the above. This is absolutely true for any kind of asset trading. We call this a simpler method of spot trading. You have the right to own the asset, trade it, and get positive results only when a bullish move or green candle happens. But we, as humanity, don’t like the limited options as well as we don’t like waiting to buy the dips or selling the highs. So we have more than 1 option to spend time while trading. They are crypto derivatives.
For many centuries, people exchanges any kind of assets with each other. The only stationary thing is changing the objects. But if we deal with derivatives trading, there is no object to change between the buyer and the seller. There are different kinds of contracts to trade. So there’s no real buyer and seller but there’s a contract to be traded in each of 2 possible ways. Now you don’t want to wait till Bitcoin pumps to fill your sell order!
What is a ‘’Contract’’? How to Use Them?
As I stated above, the contract term reflects the object being traded. If we want to compare with spot trading, you should trade directly the prices on the spot market. But you should trade the price difference while you’re encountering the derivatives market. It means that even you don’t have the asset in your pocket, you can earn when the price fluctuates. In addition to that, the derivatives market gives you the opportunity of short selling which means you bet for a lower price and have the opportunity to earn without waiting for lower prices.
The examples are always better to explain! So let me show you the graph of Crude Oil.
The graph shows the weekly price changes from early 2016. But we should focus on the right part, 2020. There’s a huge price fluctuation as shown above. Now firstly think as a standard trader. The only way to gain some cash on such a fluctuated asset, you must sell on the left ✅ and re-buy at the right ✅. Here comes the main difference between derivatives traders. At first, you don’t need to hold any amount of oil so you must not worry about the possible price decline like we faced in early 2020. Secondly, you have more than one option for each ✅. On the left one, you can short it, this makes you gain till the right one. In addition to that, you have the right to go long on the right one till that week.
I see some questions on your mind after the example. ‘’How the short selling is a better option than spot sell?’’ and ‘’How to buy long is a better option than spot buy?’’ are only a few of them. Don’t worry and go on reading.
What is Leverage? How Could It Be Better than Spot Market?
Let’s assume that you have 100$ and you want to double it while trading the Crude Oil. The only option to have 200$ is to purchase it at 20$ and sell it at 40$. Congrats if you’re one of the most patient traders on Earth. But what about the others? Here comes the spirit of leverages…
Leverage means that you have 100$ but you can use it like 500$, 1000$, or even 10.000$ with the proper leverage amount. Yes, this is possible! As you can see below, some trading pairs are highlighted with 5X or 10X. It means that you can use your 100$ as 500$ or 1,000$.
Now let’s think that you want to trade XRP/USDT pair and you expect the price will rise. In this situation, you have the right to open long with 10X leverage. Let’s assume that you use all 100$ with 10X leverage and longed XRPUSDT at 0.50$. After some time the price rises to 0.5073$, which equals 1.46% upper. At this time, you multiplied your earnings by 10X so the gain ratio equals 14.6% and your initial 100$ became 114.6% instead of 101.46$. But vice versa is true. If you open short with 5X leverage let’s say at 0.5123$, with the current price you gain 4.87% instead of 0.97%.
Shortly, if you use the leverage amount properly, the derivatives market you richer than expected. But never forget that the amount of losses will also be multiplied if your bet is wrong!
Up to now, I want to introduce you to the basics of leverage usage and derivatives trading. The most well-known crypto derivatives exchange is BitMEX, of course! But everyone has some complaints about BitMEX. Some complaint about over-filling and not using BitMEX all time, some say that BitMEX opens counter positions to liquidate open positions. Anyway, today’s topic is Bityard and I will compare these 2 exchanges in the scope of the derivatives market, user experience, and so on.
What is Bityard, briefly?
Bityard is another example of a crypto derivatives exchange founded in 2019. But not only providing the leveraged trading, but the Bityard users also have different options like spot trading or trading on some conventional assets such as Gold, Silver, or Natural Gas.
Bityard is the world’s leading cryptocurrency contracts exchange. Headquartered in Singapore, we provide safe, easy, and fast crypto asset trading services in more than 150 countries. Bityard adheres to the product concept of “Complex Contracts Simple Trade”, and aims to bring the ultimate simplified trading experience to customers.
Bityard welcomes you with a simple and easy-to-understand dashboard, not directly opens a trading page. On the home page, you will face too many positive features that Bityard has. Some of them include 4 different licenses over 3 different countries, easy registration and deposit processes, the user-friendly appearance of digital currencies, and many more. But maybe the most important one is not included: You can trade as little as 5 USDT! The minimal trading amount is generally set around 10$ or 0.001 BTC on many exchanges and this makes newcomers unsatisfied. Maybe it can be added to the dashboard to encourage more newbies while BTC is ready to see new ATHs any time soon. I think the team thought that Welcome Bonus is better than showing that feature. As a result, you can see the pop-up saying you up to 258 USDT Welcome Bonus.
There are 8 different tasks to complete. After each one, you will be gifted with some bonus and in the end, it makes 258 USDT in total. I know many exchanges distributed such a Welcome Bonus but most of them are limited up to 100$. For example, Phemex, the 7th most liquid derivatives exchange according to CoinMarketCap data, is promising all newcomers up to 80$ welcome bonus. Bityard leveraged the bonus with more than 3X.
Advantages and Disadvantages of Trading on Bityard
Apart from the home page, the trading segments contain 3 different pages: Spot, Contract, and Derivatives. Spot trading is the conventional one with more than 30 pairs to trade. Contract trading is the one that I want to teach you above under the general name Crypto Derivatives. There are 10 different trading pairs to use up to 50, 80, and 100X leverages. Don’t think Bityard is all, there is still 1 more part to discover: Derivatives. It contains 11 different conventional assets including Silver, Gold, and Copper to trade with up to 200X leverage for each one.
The trading pages are simplified, in my opinion. Although there is only 1 page available, not 5 on Binance for example, buy and sell positions are easy to receive. In addition to that, there are some default features on Bityard. For example the Overnight mode. If you select overnight mode, the system forces your orders to be canceled at 05.55.00 Singapore time. It may be useful for Asian traders but the default Overnight mode can cause some problems for European or American users. You can deactivate it in the Settings section just above the leverage box.
When we check for the trading fees, it’s standard for any trading 0.05%. This ratio is stable for both maker and taker orders. Comparing to most exchanges, it’s lower for taker orders but there are some exchanges that offer 0% or even negative fees for maker orders. I hope the Bityard team will reduce the fees to compete with others. But if you’re an influencer, no problem! You can supply your wallet with some referral income so fees will not be a real problem for you. Enjoy trading on Bityard with 5 different ways of referral income up to 60% commission. Or you can join Mining activity every day to create some dust USDT to cover our trading fees. So Bityard offers you many ways to reduce the standard trading fee.
What to Expect from Bityard Soon?
- Trading with 10 crypto and 11 conventional assets is great but the number of trading pairs should exceed 40, or even 50 to reach more people.
- Only LINK, DOT, and UNI is supported as DeFi tokens. Not to miss the current DeFi hype, users should see more DeFi trading pairs.
- There are 9 supported languages but most of them are Asian languages. To broaden your user profile with different nationalities, more languages should be added.
- BYD, the native coin of Bityard, has only 2 features, deducting the trade fees and getting excess income from upcoming token listings. In my opinion, BYD could have more extensive use cases.
- Don’t give up ‘’Complex Contract, Simple Trade’’. That’s exactly what we want.
If you are not still a member of the Bityard family, come and join us. And don’t forget the participate ‘’Prediction contest’’.
What Do ‘’Crypto Derivatives’’ Mean? Learning Leveraged Trading on Bityard was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.