0xSam (✸,✸) @SamHex6 - Twitter Profile

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9 months ago

Nounces of perp trading. "Many will deposit but few will withdraw" that quote is from me after my experiences and careful analysis on perp trading over the years . A lot of traders both new and old wants to trade perp without understanding the nuances. You don't ape the market blindly without,first of all doting your I and crossing your T. Even institutional players do get blown out of the water if they get too comfortable,Alameda research comes to mind. perpetual futures or perp trading for short is a popular derivative trading mechanism in the cryptocurrency market,but perp have no expiration date unlike the traditional futures contracts, allowing traders to hold positions indefinitely. ✅The first important naunce to consider is the trading platform and this boils down to the things that matters to you as a trader. Some believes in the ethos of decentralisation and they choose perp Dex and some can do compromise on decentralisation as it matters less to them and they will go with Cex even though their trading capital can be frozen at will by the Cex if they want without any tangible reason(there are many such cases already). While some traders use both Cex and Dex,expecially traders using delta neutral strategy. Some just want an exchange with deep liquidty,some wants an exchange with less fee, some are more interested in the funding rate while many considers leverage sizes and margin. ✅Funding rate: This is another important naunce in perp trading that a lot of traders have not taken their time to understand. And how does funding rate work you may ask? If the market is bullish (more longs than shorts), the funding rate is positive, and long traders pay short traders. If the market is bearish (more shorts than longs), the funding rate is negative, and short traders pay long traders. And how does this concern you? High funding rates can erode profits for traders holding positions for extended periods, especially in imbalanced market. So you have to monitor funding rate to time entries or else you will lose your profit to negative funding rate. ✅Liquidations: First no one is above liquidation and secondly no position no matter how large it is,is above liquidation. Show me a trader that has not been liquidated and i will tell you, it is someone that have never traded before. Many traders does not use stoploss and it makes you wonder if they know what they are doing. In as much as there are a lot of indicator you can slam on the chart and all,no one actually knows the direction the market will go next. With indicator, you can make calculated guess,but no one is sure. I have followed many seasoned traders over the years and even though they are good,they sometimes used to be blown out of their position. And again what fuels most liqiudation is over leverage. For me perp trading is like gambling,then add leverage to it and it becomes super gambling,then there is over leverage where someone will slam a 30-50x leverage on market he dont know its next direction but simply because he drew a bunch of lines and slam few indicator and on top of it did not add stoploss (james whyne come to mind). Perp trading is tool for speculation and as in speculation,you are not so sure, but its nuances (everage, funding rates, liquidation risk ) if taken into account could save you. successfull perp trading demands understanding market dynamics and carefully examines them

SamHex6's tweet photo. Nounces of perp trading.
"Many will deposit but few will withdraw" that quote is from me after my experiences and careful analysis on perp trading over the years .

A lot of traders both new and old wants to trade perp without understanding the nuances.
You don't ape the market blindly without,first of all doting your I and crossing your T.

Even institutional players do get blown out of the water if they get too comfortable,Alameda research comes to mind.

perpetual futures or perp trading for short is a popular derivative trading mechanism in the cryptocurrency market,but perp have no expiration date unlike the traditional futures contracts, allowing traders to hold positions indefinitely.

✅The first important naunce to consider is the trading platform and this boils down to the things that matters to you as a trader. Some believes in the ethos of decentralisation and they choose perp Dex and some can do compromise on decentralisation as it matters less to them and they will go with Cex even though their trading capital can be frozen at will by the Cex if they want without any tangible reason(there are many such cases already).

While some traders use both Cex and Dex,expecially traders using delta neutral strategy. Some just want an exchange with deep liquidty,some wants an exchange with less fee, some are more interested in the funding rate while many considers leverage sizes and margin.

✅Funding rate:
This is another important naunce in perp trading that a lot of traders have not taken their time to understand.
And how does funding rate work you may ask?
If the market is bullish (more longs than shorts), the funding rate is positive, and long traders pay short traders.
If the market is bearish (more shorts than longs), the funding rate is negative, and short traders pay long traders.

And how does this concern you? High funding rates can erode profits for traders holding positions for extended periods, especially in imbalanced market. So you have to monitor funding rate to time entries or else you will lose your profit to negative funding rate.

✅Liquidations:
First no one is above liquidation and secondly no position no matter how large it is,is above liquidation.
Show me a trader that has not been liquidated and i will tell you, it is someone that have never traded before.

Many traders does not use stoploss and it makes you wonder if they know what they are doing. In as much as there are a lot of indicator you can slam on the chart and all,no one actually knows the direction the market will go next.
With indicator, you can make calculated guess,but no one is sure.

I have followed many seasoned traders over the years and even though they are good,they sometimes used to be blown out of their position.
And again what fuels most liqiudation is over leverage.
For me perp trading is like gambling,then add leverage to it and it becomes super gambling,then there is over leverage where someone will slam a 30-50x leverage on market he dont know its next direction but simply because he drew a bunch of lines and slam few indicator and on top of it did not add stoploss (james whyne come to mind).

Perp trading is tool for speculation and as in speculation,you are not so sure, but its nuances (everage, funding rates, liquidation risk ) if taken into account could save you.
successfull perp trading demands understanding market dynamics and carefully examines them

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