On Sunday, the Cboe will finally launch its long-awaited bitcoin futures contract; the CME Group will launch its futures contract later this month.
This will surely add a new element to bitcoin, shifting it from a buy-side-only trade to introducing the ability to go long — or short. This should bring new, larger and institutional participants into the market.
To be sure, any time a new contract launches, you want to get a good gauge of expected movement. Take a look at the average true range of the last 30 days, the last week and day by one exchange’s measure.
Last 30 days – High of $18,464, low of $5,868
The last week – High of $18,464, low of $10,797
The last day – High of $18,464, low of $14,610
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As one can see based on the wide ranges, this is a volatile contract. Using a stop-loss order is going to prove paramount.
The question remains: Will this just be a short-lived contract, like single stock futures, real estate futures or binary futures?
No one knows.
Two pieces of advice I can offer when diving into trading this product: Markets tend to fall twice as fast as they rise. This occurs when investors catch a long-trending bull move, and then when they see their profits start to slip a “panic” occurs and everyone runs for the exit.
The second one to remember: Plan your trades and trade your plan.