Difference between revisions of "Carry trading"
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== Carry Trading in Crypto Futures == | == [[Carry Trading]] in [[[[Crypto]] [[Futures]]]] == | ||
Carry trading is a popular strategy in crypto futures trading that involves taking advantage of the price differences between spot prices and futures prices. This strategy is often used by traders to earn profits from the "carry" or the cost of holding a position over time. In this article, we’ll explain how carry trading works, provide examples, and share tips for beginners to get started. | [[Carry trading]] is a popular strategy in crypto futures trading that involves taking advantage of the price differences between spot prices and futures prices. This strategy is often used by traders to earn profits from the "carry" or the cost of holding a position over time. In this article, we’ll explain how carry trading works, provide examples, and share tips for beginners to get started. | ||
What is Carry Trading? | What is Carry Trading? | ||
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=== Example of Carry Trading in Crypto === | === Example of Carry Trading in Crypto === | ||
Let’s say Bitcoin (BTC) is trading at $30,000 in the spot market, and a one-month futures contract is trading at $31,000. This means the basis is $1,000 (contango). Here’s how a carry trade would work: | Let’s say [[[[Bitcoin]] (BTC)]] is trading at $30,000 in the spot market, and a one-month futures contract is trading at $31,000. This means the basis is $1,000 (contango). Here’s how a carry trade would work: | ||
1. Buy 1 BTC in the spot market for $30,000. | 1. Buy 1 BTC in the spot market for $30,000. | ||
2. Sell a one-month BTC futures contract for $31,000. | 2. Sell a one-month [[[[BTC futures]] contract]] for $31,000. | ||
3. Hold the position until the futures contract expires. | 3. Hold the position until the futures contract expires. | ||
4. At expiration, sell the BTC at the futures price of $31,000. | 4. At expiration, sell the BTC at the futures price of $31,000. | ||
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=== Risk Management in Carry Trading === | === Risk Management in Carry Trading === | ||
While carry trading can be profitable, it’s not without risks. Here are some tips to manage risks: | While carry trading can be profitable, it’s not without risks. Here are some tips to manage risks: | ||
* **Monitor Funding Rates**: High funding rates can eat into your profits. Check the funding rates on platforms like [https://partner.bybit.com/b/16906 Bybit] or [https://accounts.binance.com/register?ref=Z56RU0SP Binance]. | * **Monitor [[Funding Rates]]**: High funding rates can eat into your profits. Check the funding rates on platforms like [https://partner.bybit.com/b/16906 Bybit] or [https://accounts.binance.com/register?ref=Z56RU0SP [[Binance]]]. | ||
* **Diversify Positions**: Avoid putting all your capital into a single carry trade. Diversify across different assets and timeframes. | * **Diversify Positions**: Avoid putting all your capital into a single carry trade. Diversify across different assets and timeframes. | ||
* **Set Stop-Loss Orders**: Use stop-loss orders to limit potential losses if the market moves against your position. | * **Set Stop-Loss Orders**: Use stop-loss orders to limit potential losses if the market moves against your position. | ||
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If you’re new to carry trading, here are some tips to get started: | If you’re new to carry trading, here are some tips to get started: | ||
1. **Start Small**: Begin with a small position to understand how carry trading works. | 1. **Start Small**: Begin with a small position to understand how carry trading works. | ||
2. **Use Demo Accounts**: Practice carry trading on demo accounts provided by platforms like [https://partner.bybit.com/b/16906 Bybit] or [https://accounts.binance.com/register?ref=Z56RU0SP Binance]. | 2. **Use [[Demo Accounts]]**: Practice carry trading on demo accounts provided by platforms like [https://partner.bybit.com/b/16906 Bybit] or [https://accounts.binance.com/register?ref=Z56RU0SP Binance]. | ||
3. **Learn the Basics**: Understand the fundamentals of spot and futures markets before diving into carry trading. | 3. **Learn the Basics**: Understand the fundamentals of spot and futures markets before diving into carry trading. | ||
4. **Analyze Market Conditions**: Look for stable market conditions with predictable basis movements. | 4. **Analyze Market Conditions**: Look for stable market conditions with predictable basis movements. | ||
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== Sign Up on Trusted Platforms == | == Sign Up on Trusted Platforms == | ||
* [https://accounts.binance.com/register?ref=Z56RU0SP Binance Registration] | * [https://accounts.binance.com/register?ref=Z56RU0SP [[Binance Registration]]] | ||
* [https://partner.bybit.com/b/16906 Bybit Registration] | * [https://partner.bybit.com/b/16906 [[Bybit Registration]]] | ||
* [https://bingx.com/invite/S1OAPL/ BingX Registration] | * [https://bingx.com/invite/S1OAPL/ BingX Registration] | ||
[https://buy.paybis.com/click?pid=26030&offer_id=1 The most profitable cryptocurrency exchange — buy/sell for euros, dollars, pounds — register here.] | [https://buy.paybis.com/click?pid=26030&offer_id=1 The most profitable cryptocurrency exchange — buy/sell for euros, dollars, pounds — register here.] | ||
=== Join Our Community === | === Join Our [[Community]] === | ||
Subscribe to our Telegram channel [https://t.me/cryptofuturestrading @cryptofuturestrading] for analytics, free signals, and much more! | Subscribe to our Telegram channel [https://t.me/cryptofuturestrading @cryptofuturestrading] for analytics, free signals, and much more! | ||
== Sponsored links == | |||
* [https://buy.paybis.com/MCfWIf Paybis (crypto exchanger)] — Buy/sell crypto via card or bank transfer. | |||
* [https://accounts.binance.com/register?ref=V2WQ1AZO Binance] — Exchange (spot/futures). | |||
* [https://partner.bybit.com/b/16906 Bybit] — Exchange (futures tools). | |||
* [https://bingx.com/invite/S1OAPL/ BingX] — Exchange and derivatives. | |||
* [https://partner.bitget.com/bg/7LQJVN Bitget] — Exchange (derivatives). | |||
[[Category:crypto futures trading]] | [[Category:crypto futures trading]] | ||
Latest revision as of 07:36, 7 January 2026
Carry Trading in [[Crypto Futures]]
Carry trading is a popular strategy in crypto futures trading that involves taking advantage of the price differences between spot prices and futures prices. This strategy is often used by traders to earn profits from the "carry" or the cost of holding a position over time. In this article, we’ll explain how carry trading works, provide examples, and share tips for beginners to get started.
What is Carry Trading?
Carry trading involves buying an asset in the spot market and simultaneously selling it in the futures market (or vice versa) to profit from the price difference. This difference is often referred to as the "basis." The basis can be positive (contango) or negative (backwardation), depending on market conditions.
How Carry Trading Works
Here’s a step-by-step breakdown of how carry trading works: 1. **Identify the Basis**: Determine the price difference between the spot price and the futures price of a cryptocurrency. 2. **Open Positions**: Buy the asset in the spot market and sell a futures contract for the same asset. 3. **Hold the Position**: Wait for the futures contract to expire or close the position earlier if the basis narrows. 4. **Profit from the Difference**: The profit is the difference between the spot price and the futures price, minus any associated costs like funding rates or fees.
Example of Carry Trading in Crypto
Let’s say [[Bitcoin (BTC)]] is trading at $30,000 in the spot market, and a one-month futures contract is trading at $31,000. This means the basis is $1,000 (contango). Here’s how a carry trade would work: 1. Buy 1 BTC in the spot market for $30,000. 2. Sell a one-month [[BTC futures contract]] for $31,000. 3. Hold the position until the futures contract expires. 4. At expiration, sell the BTC at the futures price of $31,000. 5. Profit: $1,000 (minus fees and funding rates).
Risk Management in Carry Trading
While carry trading can be profitable, it’s not without risks. Here are some tips to manage risks:
- **Monitor Funding Rates**: High funding rates can eat into your profits. Check the funding rates on platforms like Bybit or Binance.
- **Diversify Positions**: Avoid putting all your capital into a single carry trade. Diversify across different assets and timeframes.
- **Set Stop-Loss Orders**: Use stop-loss orders to limit potential losses if the market moves against your position.
- **Stay Updated**: Keep an eye on market news and events that could impact the basis.
Tips for Beginners
If you’re new to carry trading, here are some tips to get started: 1. **Start Small**: Begin with a small position to understand how carry trading works. 2. **Use Demo Accounts**: Practice carry trading on demo accounts provided by platforms like Bybit or Binance. 3. **Learn the Basics**: Understand the fundamentals of spot and futures markets before diving into carry trading. 4. **Analyze Market Conditions**: Look for stable market conditions with predictable basis movements.
Conclusion
Carry trading is a strategic way to profit from the differences between spot and futures prices in the crypto market. While it requires careful planning and risk management, it can be a rewarding strategy for both beginners and experienced traders. Ready to start carry trading? Sign up on Bybit or Binance today and explore the world of crypto futures trading!
Sign Up on Trusted Platforms
The most profitable cryptocurrency exchange — buy/sell for euros, dollars, pounds — register here.
Join Our Community
Subscribe to our Telegram channel @cryptofuturestrading for analytics, free signals, and much more!
Sponsored links
- Paybis (crypto exchanger) — Buy/sell crypto via card or bank transfer.
- Binance — Exchange (spot/futures).
- Bybit — Exchange (futures tools).
- BingX — Exchange and derivatives.
- Bitget — Exchange (derivatives).