How Does Increased Liquidity Benefit Institutional Traders Using Futures?
Increased liquidity provides several key benefits for institutional traders. It allows them to execute large-volume trades quickly without significantly moving the market price (low market impact).
It also reduces transaction costs due to tighter bid-ask spreads. Furthermore, high liquidity ensures they can easily enter and exit positions, which is critical for dynamic risk management and portfolio rebalancing.
Glossar
Institutional Traders
Capital ⎊ Institutional traders, within cryptocurrency derivatives and options markets, represent a significant source of liquidity and price discovery, often deploying substantial capital across diverse strategies.
Dynamic Risk Management
Adjustment ⎊ Dynamic risk management involves the algorithmic, real-time modification of financial parameters within a trading system or derivatives protocol to counteract evolving market conditions.
Increased Liquidity
Market ⎊ Increased liquidity for digital assets and their derivatives is a direct consequence of global, 24/7 trading accessibility and the programmatic market-making enabled by decentralized finance protocols.