Main Takeaways
Trade on Binance Futures Trading is a facility organized by a crypto derivatives exchange called Binance, a leading crypto exchange worldwide. Binance allows traders to buy or sell cryptocurrencies such as Bitcoin and Ethereum in futures market contracts with various leverage structures. There are two types of facilities for crypto futures trading on Binance, which are as follows:
USD Futures: (Quarterly & Perpetual)
COIN F-M-Futur(Quarterly & Perpetual)
Users first open an account and can explore these features by clicking on the “Derivatives” tab in the main menu bar.
Benefits of Trading Futures on Binance
Some essential benefits of Binance are as follows:
High leverage
Binance Futures offers traders up to 125x leverage so that traders can make potential profits by using their trading skills during price swings.
Low trading fees on Binance Account
Binance leads the market by facilitating the lowest fee for users, which is 0.00152% up to 0.04%.
Variety of contracts
Binance Futures also provides various contracts with different leverage structures and expiration dates. After researching and analyzing, users can choose the best option that favors their trading strategies.
Risk management tools
Binance offers different tools for managing risk. They provide comprehensive tutorials, articles, and other relevant material to help users to manage their stop-loss and take-profit strategies.
User-friendly interface
The website’s interface is simple and easy for all users, whether new or experienced traders.
Understanding Market Price Movements in Cryptocurrencies Futures Markets
Users must understand the price movements to become successful traders and investors in the market and some common reasons for price movements, including government regulatory issues, adoption by significant companies, big news, events, and market sentiment. The most important aspect of price fluctuations is supply and demand, which implies when the price of a specific coin or token may rise, which refers to the increase in demand. Conversely, if the price of a particular digital asset falls, that refers to a decrease in demand.
Spot Markets Vs. Futures Markets
Centralized exchanges provide two major platforms for trading: Spot Markets and Futures Markets.
Spot Markets
Spot markets allow buyers and sellers to settle transactions immediately. The price of assets, such as BTC or EHT, remains identical according to supply and demand.
Futures Markets
Futures markets offer financial tools like futures and options contracts where buyers and sellers can trade with leverage. Derivative markets deal with digital assets, the same as trading in spot markets, but the difference is leverage; derivates markets allow users to take leverage on the future date.
Difference between Quarterly Futures and Perpetual Futures
Binance futures allow traders to trade with two features which are perpetual contracts and quarterly contracts. Perpetual contracts will never expire, while quarterly contracts on Binance expire after three months.
What is Leverage in Crypto Futures Trading?
Leverage is the lending structure offered by exchanges, where users can maximize their profit with less capital. For example, if a client has his capital, which is $1,000, and opens a trade worth $10,000, that refers to 10x leverage.
Setting Up Your Digital Assets for Trade Futures on Binance
Crypto derivatives exchange (Binance) involves several steps, and here is an overview of the process:
- Open a Binance Futures Account & Verifying Details
- Depositing Funds into Spot Wallet for Cryptocurrency Market
- Explore the Binance Futures Platform
- Placing Orders on the Binance Futures Platform
Open a Binance Futures Account & Verifying Details
Users can find the “Sign Up” tab at the top and right of the homepage, where users will provide personal information and complete KYC (Know Your Customer). Sign-up and KYC process in detail; click our article.
Depositing Funds into Spot Wallet to Start Trading
Here is step by step guide for depositing funds into your wallet.
- The first tab at the main menu bar is “Buy Crypto” Click on it. Once you explore this tab, you will find three options, Bank Deposit, Credit or Debit Card, P2P Trading, and Cash Balance. If your country allows you to deal with digital currency, you will get deposited funds using the “Buy Crypto” feature on Binance.
- Click on “Bank Deposit” and Select currency available in various options such as Pound Sterling, Turkish Lira, Euro, and many more. You will click on your country’s currency and then hit the Continue tab.
- Enter your amount, and there will be a “Change Card” tab under Enter Amount Tab, where you can add your bank credentials or change your card details, which you entered while creating your profile.
- After hitting the continue tab, Binance will send you verification codes via Email and mobile. After entering the codes, your transaction will be done.
- Your funds will transfer to your wallet, but first, in the funding wallet, which you can find at the end of the main menu bar. You can transfer your assets from the funding wallet to the spot wallet with one click.
- The second method is to get funds for traders whose countries are not allowing crypto-currency trading or investment; Binance offers “P2P trading”. Click on P2P trading; you will find the page with two options Buy and Sell.
- Users can sort it out by, Entering Amount, Currency type, Payment Methods, and Region type. Users can buy digital assets, including USDT, from other users residing in their country. Most importantly, users must consider three specialties while purchasing digital currency from P2P trading.
- Select the advertiser with high availability of digital assets.
- Select the advertiser with a high completion rate.
- Along with a high completion rate, the orders should also be high.
Explore & Trade on Binance Futures Platform and Placing Orders
- Users can explore the futures market tab, which is settled in the “Derivatives” icon at the main menu bar on Binance. A new homepage will be created for particular derivatives trading on Binance, and now, we will explain step by step guide. In this article, we will not explain the features such as limit order, market order, or stop-limit; these features are the same in both platforms (Spot Market, and Future Market). For that, you can read our article on spot trading on Binance.
- Transfer your funds from the spot or funding wallet to USD-M Future by clicking the tab under the “limit, market, and stop-limit” tab at the right side of the page (shown in Pic).
- On the same side of the page, you will find the cross-margin and leverage availability; you can click and select your leverage before trading and calculate your profit and loss by using a calculator, which is also available.
- In spot trading, users can trade only to buy assets to make profits. Nevertheless, users can trade with both features, which are Buy/Long and Sell/Short, which that indicates if the market goes up, users can make a profit with Buy/Long, and if the market moves down, users can also make a profit by Sell/Short trading.
- As you know, it is risky without learning, so selecting trading pairs are very important. Users must research the potential pair by analyzing the news, events, liquidity, high volatility, correlation, trading fee, and market sentiment.
- After placing the order, you can track your order history by clicking the “Orders Panel,” where all your order history, profit, loss, transaction fee deduction, and current balance.
Exploring Advanced Strategies
Traders and investors can profit from the market’s price movements by using key strategies such as follows.
Hedging Strategies
When a current trading position is at risk, to manage that position, traders open another position; that strategy is called the hedging strategy. Typically, hedging strategies are used to protect the trades from losses. Your investments can increase or decrease, and you are only accountable for your investment findings. Binance is not responsible for any failures; you might lose what you invested and not get it back.
Risk Management Techniques
Successful traders always use these techniques to protect their trading positions; the key risk techniques are:
- High profits should not tempt consumers.
- Do not open the trade with all your assets.
- Use a stop-loss strategy if the position is compromised.
Liquidate Trading Positions
If the current margin ratio given by Binance deteriorates, meaning your margin ratio has reached 100%, then your positions will be liquidated.
Closing thoughts:
Binance is a famous trading platform that provides a wide range of trading features for new and experienced users. The Binance futures market and the spot market also offer a variety of cryptocurrency pairs. Binance future markets are particularly created for potential profits for expert traders, but some traders lose because of their lack of learning or greed. In futures contracts, price movements can be escalated due to the extensive use of leverages. Traders must know the high losses, risks, price movements, spot markets, and profits while trading in futures markets. Users must be used leverage carefully because it can be a tool for amplifying losses.
FAQs:
1. Is Binance good for cryptocurrency futures trade?
Yes, Binance Futures is one of the largest platforms where you can open the trade. At the same time, price movements will be suitable for your selected pairs of cryptocurrencies, and you can also use the Time Weighted Average Price and Trading Bots.
2. Can I trade $1 in Binance futures?
Technically not; the future’s platform on Binance has a transaction fee and offers futures-trade with a minimum of $1; if you open the trade with $1, it will be rejected.
3. How long futures position can I hold on Binance?
It depends on the type of the contract; if it is a perpetual contract, then it will be unlimited, and if it is a quarterly contract, then it will be expired after three months.
4. Can I exit Bitcoin futures contracts before their expiry?
Yes, you can do it because if you can get the profit before the expiry date, you can choose the exit point of your future contract.