What are Up/Down Markets?
Up/Down markets are a type of derivative contract that turns every trade into a simple 'Up' or 'Down' question – you decide whether a market is likely to be above a certain price, at a certain time. If you think it will be, you open a 'Up' position. If you think it won’t be, you open a 'Down' position. The markets are defined by the trading asset of choice, strike price, timeframe (time to maturity), and direction (up/down).
Example:
For instance, a trade could be created on the following prediction:
ETH will be above (Up) 1.8k USD 15 mins later
When the position reaches time to expiry (i.e. 15 mins later):
- if the outcome of the above prediction is true, then the trader makes a profit.
- If the outcome of the above statement is false, then the trader takes a loss.
Why Trade Up/Down Markets?
These markets offer a fantastic way of trading price action, hedging high leveraged positions and balancing your exposure to specific assets. It is a preferred insttruments for traders looking to avoid the complexities and heightened risks associated with perpetual contracts, such as funding rates, potential for liquidation, and uncapped risk.
