Trading tournaments are unique crypto trading campaigns organized by cryptocurrency exchanges, encouraging users to trade more to win incentives, such as tokens, hardware wallets and more/
What Are Trading Tournaments?
Trading tournaments are one of the most popular ways to make a profit from your crypto holdings. These are exclusive crypto trading events organized by spot and derivative crypto exchanges, offering traders a unique way to test their knowledge of the cryptocurrency market and rewarding them for their skills.
Since the crypto industry is fiercely competitive with new platforms and innovations launched regularly, trading platforms organize trading tournaments to attract new users and motivate them to trade.
These competitions come with specific requirements and different formats, each designed to fine-tune the user’s skills and contribute to new trading techniques and tactics. In general, trading tournaments involve speculating on selected cryptocurrency price movements and buying and selling the underlying coins via an authorized exchange or a CFD (contract for difference) trading account.
Although the rules and rewards may vary, crypto trading tournaments usually reward traders with the highest trading volume of a specific coin/token for the tournament duration.
Frequently Used Terminologies in Trading Tournaments
Some of the frequently used terminologies used in trading tournaments include:
- Spread: Describes the difference between the highest bid and lowest offer for a specific cryptocurrency. For instance, you bid $100 for a coin, and the seller declines your offer, saying that they speculate that prices will rise and they’re willing to sell the coin for $120. The difference between your bid ($100) and the seller’s ask price ($120) is the spread.
- Lot: It refers to the batches of crypto tokens used to standardize the size of trading. As cryptocurrencies are highly volatile, these lots tend to be very small and consist of the tiniest units of the base coin.
- Leverage: This tool effectively allows traders to expand their portfolio’s value by borrowing (taking debt) against the equity in their accounts. It effectively grants users the opportunity to gain greater exposure to cryptocurrencies without paying the total value of the trade upfront. Exchanges will ask you to deposit a small amount, known as margin, instead of the entire trade cost. Although it can help magnify capital and even profits, it is a double-edged sword that can cause losses to spiral quickly.
- Margin: This term denotes the initial deposit (investment) you made to open and maintain a leveraged position. For instance, an exchange may ask you to pay 15% of the total value for a coin valued at $3000. So instead of depositing the total amount, you’ll only deposit a margin of $450.
- Pip: This unit of measurement, traditionally used in foreign exchange trading, represents 1/100th of 1% in price movement. For cryptocurrencies, it often labels single-digit price fluctuations. In terms of a token traded at the dollar level, a price change of $1 to $2 might be considered a single pip.
- Trading Volume: Trading volume means the number of times a cryptocurrency has been transacted and changed hands over a predefined time.
Ben Zhou, the co-founder and CEO of global cryptocurrency derivatives exchange Bybit, has had eight years of forex experience with forex brokers XM as the General Manager for the Greater China region.
Back in 2016, Ben started taking a keen interest in crypto. By 2017, he had launched a YouTube channel to educate users about the benefits of investing in cryptocurrency. Combining the best aspects of traditional finance and crypto, Ben founded Bybit in 2018, which is now among the top three derivatives exchanges in the world.
Connect with Ben directly on Twitter.