This year the crypto market has been rocked by many crises, the weather has been a constant presence. With this in mind, many traders have lost faith in traditional CEX trading and are looking to change their strategies.
Turning to alternative trading styles and products is a way to reduce risk and minimize losses. Cointelegraph’s interview with Eightcap has more about derivatives trading in the crypto space.
Q: FTX has become one of the biggest crypto risks in recent times. What could have been done to avoid this?
The failure of FTX taught investors and crypto providers important lessons about security, transparency and trust. FTX was one of the largest crypto exchanges in the world. It’s clear that they don’t have many controls across the board, but one thing is certain: the exchange should never have used its customers’ funds to pay its own expenses, debts and loans to subsidiary companies (in this case, Alameda Research). Unfortunately, following the collapse of FTX, there is currently a significant lack of confidence in the crypto space not only from investors, but also from government entities that once embraced the benefits of digital currency.
Q: How can investors approach the market differently to make safer investments?
Clearly, investor confidence has taken a hit after the collapse of a prominent and popular crypto exchange. Due diligence is required when opening accounts with money exchanges and brokers. One of the main issues is regulation oriented. It is important for investors and traders to check the regulations and licenses of their suppliers to understand which regulatory body they are approved for.
Eightcap is regulated in multiple jurisdictions, allowing us to offer trading in over 130 countries. Investors and traders should consider the transparency and handling of customer funds when choosing a broker or exchange. At Eightcap we ensure that client funds are held in Tier 1 bank accounts. This is described in our product description which is provided to all our customers.
Q: What are the possible ways to increase awareness and knowledge in the crypto space to make it easier for investors to use complex financial instruments?
Knowledge of the crypto landscape is fundamental for novice traders. It’s also important to learn and adapt tools that can enhance your marketing strategy. At Eightcap, education is at the scale of what we do and what we deliver.
We encourage all of our customers to take advantage of the extensive educational resources readily available with their business accounts. We’ve launched a new initiative called TradeZone, where we invite a number of expert guest analysts to provide consistent market insight through written commentary and weekly webinars.
Q: How can derivatives help reduce the amount of risk in a crypto investor’s portfolio?
Managing risk is a critical aspect of any strategy, and traders should make sure they understand what it means to trade profitably. Essentially, you’re trading on margin, which means you’re exposed to price fluctuations, so both profits and losses can add up.
Some strategies we encourage our clients to consider when trying to reduce portfolio risk are strategies such as working out the profit and loss ratio of each trade. We also want to emphasize the importance of using a margin calculator to determine how much capital is at risk if the markets move against your position. It’s another strategy we’ve seen a percentage of our customers adopt. This can reduce risk as you take a contrarian position on your open trade.
Q: What does the future of crypto derivatives look like?
In the year In the ongoing crypto winter of 2023, we can see the adoption of crypto derivatives trading in the industry increase as investors try to take advantage of market volatility. We expect an increase in spot crypto traders moving to derivatives due to tighter regulation and lower trading fees and spreads. At Eightcap, we have some low fees for traders to enter the market and competitive spreads on all instruments, especially some of the larger coins with strong liquidity.
Q: How does Eightcap ensure the safety of investors when trading on the platform?
Eightcap prioritizes the stability and security of our platform when clients trade derivatives. To ensure this, we have partnered with Amazon Web Services and leading cybersecurity company CrowdStrike to protect our infrastructure and customer data.
We are authorized to trade crypto derivatives (the UK is an exception). Therefore, we ensure that customer funds are segregated and held by tier 1 banks. Finally, we assure our retailers that we adhere to strict regulatory and security standards.
Q: What are your plans for Eightcap in the near future?
There are many jobs for 2023. We have a new B2B solution that we have launched – specifically targeting consumer facing companies. By offering our products to their customers, they can extend their existing and new customer lifecycle and gain additional revenue streams. We have upcoming product launches planned to enhance our customers’ business experience.
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