Crypto Trading #20 – Futures Correlations

Hello, this is JB Trader and welcome to crypto trading. Thanks for joining me. What I have pulled up is the 30 years US Treasury bonds, I was taking a look at their price chart. And it’s in a downtrend on a daily chart.

What I noticed is that it looks very similar to the Bitcoin futures chart which is up here in my upper left-hand corner. This is the Bitcoin futures daily continuous contract chart up here. It is also in a downtrend.

Their charts look very similar and therefore, what happens is when I look at the US 30 years Treasury bonds, I know that that’s usually inversely correlated to the ES, the US market. That’s in my lower left-hand corner, this daily chart right here.

This is the ES continuous contract, the @ES symbol which is in an uptrend. So, these are like opposites if you notice the chart. Alright, and so what will happen is if I’m long in a position on the ES or in the market, I will also want to belong in an area of support in the US bonds.

That’s a type of hedge, okay? So, when I’m in one position if the price goes against me, then I’ll have another position that I’m making money on to make up for any losses in my primary position, okay? And again, hedges is to offset risk, so I’m in two different positions.

One offsets the other and so that’s just very interesting how the Bitcoin futures chart looks similar to the bonds. Another thing, another instrument I look at in my upper right hand corner I have the crude oil. This is the crude oil continuous contract, the futures contract here.

This is also in an uptrend and it moves similar right now to the market. The ES, they’re both in an uptrend. These two and again Bitcoin futures and the bonds a downtrend. Now a while ago on a previous video when I was looking at the Bitcoin futures, someone had asked why would I want to trade other things.

I believe out now I was looking at options on crude oil that’s what I was doing. And he asked why would I want to trade options on crude oil or any other thing when the cryptocurrency market was just going straight up and Bitcoin was just raging up. The answer to that is I’d like to be diversified.

I don’t want to be overexposed in one direction over another and it’s just very risky you want to. I like to diversify my part of my portfolio. I don’t want to be overexposed to the upside too much or to the downside too much like overly bullish, overly bearish.

I like to spread my positions out and look at what correlates or what inversely correlates with one another. So, when you trade futures just be very mindful of that. You don’t want to belong and everything that’s going up at the same time because if the price does come back and have a pullback or starts to turn into a downtrend, you’re just losing in all of your positions.

All right, so well thanks for hanging out I just wanted to share that with you guys and take a look at my next video coming up. I’m gonna look at the charts with different cryptocurrencies. I’m gonna look at an Etherium and Litecoin and see what’s going on in their price charts.

Check me out on twitter @JB_trader. And I do try to give a shout out in areas of support and resistance and what’s going on with Bitcoin and different cryptocurrencies when I can. Alright, thanks for hanging out with me and I’ll talk to you later, bye.

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