In 2018, the economy took a severe hit and continued to decline throughout the whole year before stabilizing and heading towards an L shaped recovery. Similarly, the stock market fell throughout the year. This downward movement also affected many secondary investment markets such as forex exchanges. In response, many intraday traders looked for ways to diversify their investments and found one in a cryptocurrency derivatives trading which is an investment area that is less affected by macroeconomic policies. Statistics for 2018 show that the average daily transaction volume of cryptocurrency derivatives is around USD 10.4 billion, accounting for more than 52% of the digital currency trading market share.
Switching from Foreign Exchange to Digital Currency Derivatives is Effortless
Digital currency derivatives refer to contract products derived from digital currencies, such as futures, options, and the new and very popular perpetual contracts. Compared with forex, cryptocurrency derivatives are still very new, but traders who are familiar with forex can easily switch between the two markets as they bear strong similarities.
First, sets of trading plans and technical analysis strategies that traders use, and are proficient in, when trading in the forex market are equally applicable in the cryptocurrency derivatives market. For example, some traders like to use the Fibonacci analysis model or the moving average both of which can be used in cryptocurrency trading.
Secondly, traders who are accustomed to high leverage and double-headed arbitrage do not have to worry about having to adjust to a different set of rules and features. Cryptocurrency derivatives trading also supports high leverage, long and short double-headed games. Many day traders also refer to it as a financial product with good leveraged attributes and strong earning potential. The daily average volatility of the market is around 1%-10%, which is suitable for short-term arbitrage for day traders who are good at trading within big fluctuations.
In addition, the decentralized nature of cryptocurrency makes it less affected by policy changes than the traditional forex and stock markets. As an example, on Bybit, a cryptocurrency derivatives trading platform, it only takes 2 minutes to register, deposit and start trading. Additionally, there is no cumbersome KYC certification process, making the whole process simple, convenient and efficient. This is one of the most important reasons why more and more traders are switching to the cryptocurrency derivatives market.
Shortcomings of the Cryptocurrency Derivatives Trading Platforms
As a new investment commodity, cryptocurrency trading has seen a massive rise in popularity but this was also accompanied by many shortcomings on the exchanges. One of the biggest critics is the poor performance of some trading platforms. The forex and stock market derivatives are seen by many as having achieved maturity and now proposing a solid, secure, and reliable product along with an intelligent operational system (such as EA). However, most trading platforms for cryptocurrency derivatives are still in their infancy. The basic Take-Profit and Stop-Loss functions are not enough for complex strategies, and many platforms do not even have these functions.
Making an intelligent and functional trading system requires a high-quality matching engine, risk control, algorithm, and design. The R&D team must be made of professionals with a lot of experience in quantitative trading, software development, and cybersecurity. All of the above necessitates a lot of time, efforts, and money something many platforms have decided not to invest in leading to them lowering the standards and providing sub-standard platforms.
The Bybit core team is made up of renowned blockchain investors and finance executives who wanted to come together and create a product that moves the blockchain industry forward.
Bybit was built by renowned blockchain investors and finance executives who wanted to come together and use their financial experience to create a product that would move the cryptocurrency derivatives market forward. They aimed to create a platform that would have the same level and standards as a traditional financial platform and answer the needs of the traders and resolve the current market inefficiencies.
The Problem of Direct Stop Loss After Entering the Market
Professional day traders generally have their own strategies and habits. They research and prepare a complete set of trading plans with clear entry and exit points. As many platforms do not currently offer a practical solution for Take-Profit and Stop-Loss orders, they lose a lot of time having to input these orders manually.
Based on the design of traditional day-trading platforms, Bybit introduced an advanced order system in which traders can directly set their Take-Profit and Stop-Loss orders from the order confirmation window when placing limit orders. These can also be set up and freely changed on any open position in the “Positions” tab. The UI, design, and customization options were all made to respond to traditional day-traders’ habits.
Trailing Stop Loss
A Trailing Stop is an advanced order frequently used by traders in more complex strategies or with less time to survey the markets. The current cryptocurrency market is growing with the top 5 platforms having a daily trading volume amounting to $14.6 billion, $977 million, $717 million, $421 million, and $373 million respectively. Despite this, only a handful of platforms currently allow Take-Profit and Stop-Loss to be set-up in one click, and fewer still have a Trailing Stop order available.
Based on the needs of traders, Bybit introduces a more flexible and user-friendly trailing stop function.
The Trailing Stop is a modified version of a Stop-Loss order that tracks the price and maintains a set distance in the chosen direction to lock in profit and reduce loss.
Traders with a forex market background are familiar with MT4's trailing stop function.
Bybit’s advantage is that, contrary to many other exchanges, all exit positions can be concurrently set up.
To make it clearer, when holding a position, a trader can set up a Take-Profit, a Stop-Loss, and Trailing-Stop all together to enact his most profitable trading strategies.
If the trader holds multiple orders and is set to trailing stop loss when opening a position. After the order enters the position, the trader performs other operations. Finally, all the orders of the trader's position are still closed according to the most reasonable income.
Another feature of Bybit’s Trailing-Stop is that the order remains active whether the trader remains online or not. While other platforms like MT4 would require their page to remain open to execute said order.
Bybit is committed to providing a better trading experience for our users. Cryptocurrency derivatives trade 24/7 without stop. As such, traders must be able to trade and set up their orders to be executed automatically in the most comfortable and convenient setting possible. The platform’s advanced order system with its Take-Profit, Stop-Loss, and Trailing-Stop orders were created just for that.
For day-traders wishing to diversify their portfolio and take advantage of the volatility of the cryptocurrency derivatives market, it is important to choose a trading platform that can efficiently execute a complete trading plan, effectively manage investment income, and offer a good trading experience. Bybit was created to provide day-traders with a fast, fair and human-oriented trading environment in the cryptocurrency derivatives market.