Highlights ①. Gate Intermediate Futures Courses are designed to elevate traders to professional status by developing a robust futures trading system. These courses aim to enhance traders' skills comprehensively, covering investment philosophy, futures trading tools, and trading systems. ②. This section will introduce one of the essential trading skills: how to select a suitable trading pair for futures trading.
1. BTC and ETH: The Indicators of the Entire Crypto Asset Market
①. BTC is the Preferred Choice for Futures Trading
BTC, as the pioneer of all crypto assets, has a major impact on the overall trends of the crypto asset market, determining whether it is bullish or bearish. The performance of altcoins is also closely correlated with BTC's trends. Therefore, BTC is the primary choice for experienced futures traders when choosing a trading pair. The following figure depicts the changes in BTC market share:
②. ETH is the Vane of the Altcoin Market ETH has consistently held the second position in the crypto asset market, commanding a market share of up to 20%. Its trend is positively correlated with BTC. As the world's first public blockchain, Ethereum supports a vast and thriving application ecosystem that spans nearly all crypto asset sectors, including DeFi, NFT, GameFi, and the Metaverse. Although ETH trends follow BTC, its price fluctuations are typically more significant than BTC's during the same period. Also, ETH serves as a leading indicator of the altcoin market. As a result, ETH is also the most popular choice for futures trading.
2. Factors to Consider When Trading Altcoin Futures ①. Market Capitalization Market capitalization is a key metric for evaluating the quality of a crypto asset project. A higher market cap indicates a larger number of asset holders and stronger market consensus. Assets with higher market caps are generally more stable and less prone to extreme price fluctuations, reducing the risk of liquidation in futures trading. You can check market capitalization of various projects on platforms like CoinMarketCap: CoinMarketCap or CoinGecko: CoinGecko.
②. 24-Hour Trading Volume Liquidity is crucial in the crypto futures market. High liquidity ensures fair asset pricing, reduced market volatility, easier transactions, minimal slippage, and more reliable technical indicators. To measure liquidity, focus on bid-ask spread, order book depth, and trading volume. The most important indicator is the 24-hour trading volume. In the USDT-margined perpetual futures list, trading pairs are ranked by 24-hour trading volume from high to low. Higher-ranked pairs are generally more preferable.
③. Market Popularity and Volatility
The crypto market is divided into various sectors like DeFi, NFT, Metaverse, gaming, storage, Polkadot, etc. Different sectors may gain popularity at different times, leading to market speculation. Assets with significant 24-hour price volatility often attract more attention and are considered good trading targets. Hence, focus on assets with high 24-hour price movements in the trading pair list.
3. Summary
In this section, we focused on a key futures trading skill—how to choose the best trading pair from among hundreds of futures contracts. Typically, BTC and ETH are the top choices for traders. Beyond these, the best trading pairs can be identified by examining trading volume and price movements. Furthermore, paying attention to the leading coins in different market sectors is advisable.
For practical trading operations, visit the Gate Futures platform. Register for a Gate account now and begin your contract trading journey!
Disclaimer This article is for informational purposes only and does not constitute investment advice. Gate is not responsible for any investment decisions you make. Content related to technical analysis, market assessments, trading skills, and traders' insights should not be considered a basis for investment. Investing carries potential risks and uncertainties. This article offers no guarantees or assurances of returns on any type of investment.
