Synthetic trading

[Obari]

I barely hear people talk so much or even talk at all about synthetic indices trading and I still wonder if this very sector or area of trading has even be tapped in?

Synthetic according to Google investopedia definition "is the term given to financial instruments that are engineered to simulate other instruments while altering key characteristics, like duration and cash flow. I want to know of there people who trade synthetic indices and do you see yourself or think of stopping it anytime soon.?

[1714153920]

1714153920

[1714153920]

1714153920

[1714153920]

1714153920

[CryptopreneurBrainboss]

In general, in cryptocurrency, everything that is not a spot product is an extremely dangerous product due to the fact that the very nature of cryptocurrency is extremely volatile and subject to strong price fluctuations. Because of this, various derivatives, algorithmic stablecoins, synthetic products and other products become dangerous for investors.

Exactly and new traders are advice to stay away from these alternative trading methods. The most common which is future trading is already dangerous and has liquidated more traders than those it has been favorable to. Don't be fooled by what you see online or on crypto twitter because for every success story you see they're either fake or we have hundreds of unsuccessful stories been hidden. I'm just getting familiar with the team synthetic training after seeing you topic, I have to go look it up and then I understood why it isn't a common term atleast to my knowledge probably because I'm not much active in the trading sector.

The industry is very much new and things aren't yet mature enough for this other methods of trading to be popularized. For now spot trading has to be the most advisable form of trading as with spot, the balls is in your court and if you do your analysis properly you can easily outsmart the market. If spots doesn't favor you then fall back on investing (buying and holding) as it has been proven to be very effective in the short lifespan of the industry.

[palle11]

This is more of a more confused kind of terminology in trading. I rather stick with what is already difficult than compounding a difficult situation  All that a trader is looking for is profit and to dive into a more confusing system is sure a way to loses. Learning the spots trading is better. Moreover I use to hear the word in gambling how come is making it way in trading ?

[mk4]

I want to know of there people who trade synthetic indices and do you see yourself or think of stopping it anytime soon.?

Why does one person need to stop trading synthetic assets if it's pegged price is consistent? Platforms like eToro that has CFDs have been working well for years, but of course you also need to nitpick which platforms you should trust. Now, obviously investing is a different thing — I wouldn't recommend holding synthetics for long periods of time especially if "real" assets are accessible.

[Tytanowy Janusz]

I think the most popular synthetic asset is BTCDOWN and BTCUP tokens available on binance or BEAR, BULL (3X Short/Long Bitcoin Token) available on FTX. So we have such options but they are not that popular because they performe poorelly on such volatile market as crypto market is.

[adaseb]

If I recell, any type of syntetic trade is basically a future or deritative.

Basically there is tons of volume on the bitcoin and ethereum futures and perpetual contracts this is all considered synethic because you aren't trading the real spot market coins. However there are market makers that hedge and keep everything in close price. There is also the funding rates which are to control that the mark price will be close to the index price.

These also exist in any other forms such as CFDs, options, forex, etc.

[Obari]

I want to know of there people who trade synthetic indices and do you see yourself or think of stopping it anytime soon.?

Why does one person need to stop trading synthetic assets if it's pegged price is consistent? Platforms like eToro that has CFDs have been working well for years, but of course you also need to nitpick which platforms you should trust. Now, obviously investing is a different thing — I wouldn't recommend holding synthetics for long periods of time especially if "real" assets are accessible.

Thank you, but did you ever come across DerivGo app?
If no, then i would strongly recommend you try it, maybe you would understand more clearer why I love the app and I guess you might love it as well because of its simplicity and ease to trade synthetic derivatives

[bocyaj]

We should made a good way of strategy to win a trade.Trade needs of huge analysis then a less involvement.BTCDOWN and BTCUP was the good one and available on a big exchanges like Binance ,FTX.If you done Btc trading in FTX pro,you can withdraw the bitcoin from FTX with zero dollars fees.It was added advantages to the FTX trading exchange.When the market up,we can earn more from it.

[mk4]

Thank you, but did you ever come across DerivGo app?
If no, then i would strongly recommend you try it, maybe you would understand more clearer why I love the app and I guess you might love it as well because of its simplicity and ease to trade synthetic derivatives

Nope. Though I really don't need to try out other apps to understand how helpful synths are with trading(again, not recommended for investing), as I already trade synths on-chain through platforms like GMX.

[Oshosondy]

Exactly and new traders are advice to stay away from these alternative trading methods. The most common which is future trading is already dangerous and has liquidated more traders than those it has been favorable to.

You are not wrong but future trading has its own advantages too, but newbies prefer to just use it to leverage 2x or more and it become very risky.

I will not advice anyone to go for future trading because of the leverage temptation which might likely be what would happen and money loss. But there are few advantage of future trading:

Going 1x which can be like spot trading
Going short
Not you key not your coin. It offers you the ability to reduce the fund you have on exchanges. Assuming you have $1000 you trade with, you go for 1x leverage. You can just move $700 to noncustodial wallet and trade with $300 with 3.5 leverage. Knowing that you have $700 on noncustodial wallet which can be a collateral in case, but depending on your trading. Many long term future trading holders gindirnthis option.

But future trading is truly riskier.

[hugeblack]

Many traders do not trade derivatives due to the limitations of identity verification or the limits of risk to these methods of trading, so at least you will not hear much discussion of such trading.
about people who are talking about it, you can use search bottom and will find a few topics about it.

[Wind_FURY]

OP, I believe it's better to buy the actual thing/asset, no matter whether you are buying for a months-long trade, or a short-term trade/day-trade, UNLESS you want to trade with leverage, which is probably the only advantage in buying and selling these synthetic stocks/indices.

I tried actively "trading" with both no leverage, and with leverage. What it did was make me lose money.