Derivatives trading isn't new at all, but it has been enjoying a revival of late. As the crypto market has traded askance, many traders have northed the leverage and hurried to swap Bitcoin derivatives that halsen big risk and reward. While platforms such as Deribit and Bitmex have highly profited from a gain in synthetic assets, a lot of traders have been left stranded.
Bitcoin trading is usually seen as navigating a rough and bumpy pavement, with each trough and pothole appealing a rallying cry to "Hold" and persist steadfastly till the end. If at channels relationship of resemblance is correct, then the derivatives trading is like decelerating that pathway.
There are 3 sorts of synthetic alternatives available to Bitcoin traders, namely; futures, margin and derivatives. Some major platforms provide all three types. Traditional exchange platforms like Bitfinex, Poloniex and Hitbtc provide only margin trading, and then there is a platform like Okcoin which provides futures and margin but without derivatives.
Cryptocurrency Twitter and Telegram channels are full of tales of woe from leveraged crypto traders who got stopped out and had their positions liquidated. If canonical trading is cocaine-like in its addictiveness, big leverage is crack cocaine.
One of the largest whines for crypto traders is those unforeseen events which can ruin even the best-laid plans. Even expert crypto traders are taking a great risk, over and above those in association with Bitcoin's 'natural' trends.
Login errors, DDoS attacks, surprise price increases and downtime have led traders to lose everything. When such events conspire, there is no retreat.
There is also little strife surrounding its margin trading. No matter how honourable the platform traders consider, or how good its uptime, it must be acknowledged that derivatives trading is a perilous business in which a handful profit hugely and the remainder are lucky and blessed to come out with their initial stake.