Disclaimer: Dear readers, this article is for informational purposes only and is not a recommendation for financial actions. Trading Pre-launch futures on tokens is not the same as trading the tokens themselves. Please consider this before engaging in trading on the platform.
Hello everyone!
In this article, we'll explain what Pre-launch futures are and how Storm can help you trade futures on tokens before they officially hit the crypto market. Let's get started!
📰 A bit of history
Since 2018, there has been an OTC (over-the-counter) market for trading tokens that have not yet been listed on exchanges. Enthusiastic crypto traders sought token allocations on various forums, purchasing third-party accounts in the hope of a bright future for the acquired assets.
The main drawbacks of this method were the honesty and integrity of the sellers, as well as the uncertain conditions of the future project. The project could decide not to list the token on an exchange, or the token prices could differ significantly from the expectations of OTC buyers.
Due to this uncertainty, new types of markets began to emerge, allowing for earnings during the pre-launch phase of a token. These markets became known as Pre-Launch!
This innovative market offers traders the opportunity to engage in futures trading of upcoming tokens, providing access to highly anticipated assets.
🪙 Token or not a token?
A crucial point to start with: Pre-launch trading is not trading tokens but futures* on a token. The Pre-launch market allows you to speculate on where the price will go after listing - whether it will rise or fall is decided by the market participants.
*Futures are financial contracts where assets are not traded; instead, the parties agree only on the purchase and sale price of the asset.
💎 Pre-launch Futures. A Complete Guide
1️⃣ What tokens to trade?
Let's start with understanding the name of the pair using the example of CATI-F/TON:
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CATI-F: CATI Futures - the name of the futures asset for trading.
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TON: the token used to secure positions.
To trade in a Pre-launch pair, you will need TON tokens. They will be used as collateral for your position and to pay exchange fees.
2️⃣ Long or Short?
If you believe the asset price will go higher after listing on exchanges than the current market price on Storm Trade, choose Long. If you think the price will fall below the current market price on Storm Trade after listing on spot exchanges, choose Short.
Pay attention to the current market price. It is volatile and can change, affecting trading results and your open positions.
3️⃣ Market or Limit?
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Market order: allows you to open a Long or Short position at the current market price.
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Limit order: helps you choose the best entry point for a position. However, the price can be unpredictable as it is determined by traders in real-time.
Stop orders: these orders allow you to open a position at the current market price (Stop Market) or at a Limit price (Stop Limit) when the specified Stop price is reached.
4️⃣ Leverage
Leverage is a tool that helps increase your trading volume. By choosing 3x leverage, you use the maximum boost of your capital. Be cautious, as trading with leverage involves risks such as losing part of your position or its liquidation.
5️⃣ Stop Loss and Take Profit
These tools help protect your open position. Stop Loss is set to limit losses when they reach certain levels (-15%, -25%, -50%).
Take Profit allows you to automatically close a position when a desired profit is reached, whether it's +25%, +50%, +100%, or even +300%.
📲 Trading parameters
Starting price
The starting price of a Pre-launch token future is determined by its OTC price or pre-market price, if available.
Trading closing date
Trades close when the token is listed on any spot exchange. All operations on current positions become unavailable.
P&L calculation after closing trades
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For one week starting from the first transaction after listing on any exchange, the market price of the token is tracked. After 7 days, the average token price is formed, which becomes the settlement price of the asset. The P&L of traders is calculated based on this price and their positions at the time of trade closure.
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All Long positions entered above the settlement price and Short positions entered below the settlement price lose part of their collateral proportionate to the price deviation percentage multiplied by the leverage of the position. A profit pool is formed.
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All Long positions entered below the settlement price and Short positions entered above the settlement price receive their entire collateral and a portion of the profit pool, calculated proportionally to the position volume and entry price.
If, within 3 months from the start of trading, the token is not listed on spot exchanges or it becomes known that the token release is canceled, trades close, and the settlement price of the asset is considered the current Pre-Launch pair price, based on which the P&L of traders is calculated.
Disbursement of funds
P&L disbursements to traders occur 7 days after determining the settlement price.
Insurance Fund
A 1% commission is charged on all trading operations in Pre-launch pairs. Funding and Rollover fees are not charged. Half of all collected commissions go to the insurance fund. When calculating P&L, the insurance fund is used to cover losses if individual traders' losses exceed their margin obligations.
Conclusion
That's basically all you need to know to start trading! But remember, trading with leverage involves risks. Trade only with funds you are comfortable losing and practice risk management. Storm Trade is a tool to get started, but the trading strategy is formed by you independently!
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