How can futures be traded on the famous Binance platform?
Nowadays, When Crypto Currencies are mentioned, instantly Binance Platform would get mentioned as well. Due to the fact that the platform has earned the trust of many throughout the years. Today Binance is the biggest platform for cryptocurrency trading without dispute. Its founder CZ is the richest founder in the cryptocurrency world. The currency BNB is the platform’s own currency and one of the biggest in the market. Therefore, many choose to trade using this platform for the futures trading, for it’s one of the biggest platforms that derivatives could be traded on in the world of cryptocurrency. So, let’s dive deeper into futures trading on this platform.
First, you need to know that Binance is a centralized platform. Therefore, this makes it subject to some financial laws that require customers to perform KYC in order to use the platform. This is of course after you create an account on the Binance platform. There are two KYC levels on the platform. If you pass the first of them, you will be able to use the platform without problems. The second will give you an opportunity to withdraw and deposit a lot of money.
Because the Binance platform is large, there are several different ways to deposit funds on it. This is of course after you create an account and go through KYC procedures.
You can deposit money on the platform by linking your bank card and you will pay about 2% purchase fee. You can also buy via bank transfer, and this method is very easy if you live in the UAE. Finally, the best way is to buy through the P2P peer-to-peer market on the platform. This is also how you can buy digital currencies. The platform is distinguished by having the largest P2P market in the world of digital currencies.
If you own digital currencies on a platform or digital wallet and want to transfer them to the platform, you can do this very easily as well. All you need is the appropriate network and the address for that network. And on the Binance platform, such as: MEXC platform You will find that there are different wallets for you on the platform. This means that there is a special wallet for spot, another for funding, and another for Futures or futures contracts. If you buy cryptocurrencies via P2P you will receive funding. You can move it to futures via an internal transfer. If you purchase directly with cash, you can transfer it from spot to futures. Also, if digital currencies are sent to you, they will arrive through the Spot wallet, and then you can transfer them to futures.
Before you start trading futures on... Binance platform There are some important things to know. You need to know well the difference between futures trading and... Margin trading margin trading.
Margin trading allows you to borrow from the platform against your assets as collateral.
After this, you have to repay this loan later. Trading via futures contracts is through financial leverage, which we will explain later.
You also need to know the difference between Coin-M and USD-M. Simply put, these are the types of futures contracts found on the platform and most centralized platforms as well. Remember, trading futures is trading the price of a currency, not the currency itself. Thus you are not buying the currency but just entering into a trade on the direction of that currency.
You can enter into a trade with a margin in dollars or in digital currencies such as Bitcoin and Ethereum. Via Coin-M margin can be digital currencies. But this method is not recommended due to the high volatility of digital currencies. Your deal could be negatively affected if the price of the currency used as margin falls too much.
The preferred method for trading futures contracts is via USD-M. Here, your margin will be in the form of USDT or BUSD, but preferably USDT. This type is safer due to the stability of the dollar price in the market.
Below you can see an image showing what a USD-M Bitcoin contract looks like on Binance. You can trade either via computer or phone, and the difference between the two is no different. The same features exist on both applications.
It is very important that you know the funding rate on the platform. The financing rate is a characteristic responsible for achieving a balance between long buying operations and short selling operations. This is through a financing rate that you can see in the picture above, in the middle of the picture, in the upper part of it, slightly to the right.
This rate is simply either positive or negative. In the picture, for example, it is negative, which means that the short seller pays a percentage to the long buyer. This is because there are more sellers. Therefore, the platform forces them to pay a percentage as a form of incentive to achieve a balance between the two sides.
If the rate is positive, it means the opposite that there are many more longing buyers. Thus they pay the sellers. This rate will not affect your trades in the short term. But it will severely affect any deal that will remain open for a month or more. It changes every few hours every day, so if you are going to open a long-term position, you have to follow this rate.
You should also know the difference between the different types of leverage Binance platform. Usually futures trading is done using leverage but you should not use it. Leverage is an advanced trading method to increase your purchasing power. Depending on the leverage, your deal liquidation percentage is adjusted. If the leverage is 2x, i.e. twice your margin, then the liquidation percentage is 50%. That is, if the price falls by 50%, this is your margin, so the deal is liquidated. If you don't want to use it, just set it at 1x, i.e. trade with your margin only.
AndLeverage When you are on Isolated it means that each trade will have its own margin. If it is on Cross, this means that all the funds in your futures wallet may be used in one transaction to save it from liquidation. It is always better to use the lever on isolated. This way, if a deal is liquidated, your entire account will not be damaged. But be careful, the deal here is all the deals you enter into for one digital currency. Therefore, if you enter into five different trades at five different price points for Bitcoin, they are all considered one trade. This is because the currency is one. If you enter into a transaction for Bitcoin and another for Ethereum, in this case they are counted as two transactions. It is very important that you know this, so always remember it!
At the bottom of the screen on the right you will find margin ratio. This is your margin rate on the trade. It is always better to make this feature in single asset mode instead of multi asset mode. This is because single asset mode is suitable for Isolated. This simply means that you only risk one of your crypto assets (if you have more than one currency in your futures wallet), but if you choose multi assets mode, you can risk more than one currency from your wallet.
To the right of the page for trading currency futures, you will find a computer sign. If you click on it, you will find the computer for futures contracts. This tool is very important for defining objectives, risks and strategy.
This tool will allow you to perform all the different calculations that you will need to do. This is in order to determine the risks of the transaction in the event of a loss and the gains of the transaction in the event of an increase in the price. It is also possible to calculate based on the trading strategy. If you want to buy for the purpose of increasing the price, you can calculate the risks using long. If you want to sell short, you can also calculate the risks through short.
Through this tool, you can also determine the profit-taking and stop-loss strategy. This is because in trading capital is always the priority.
You need to know about the trading fees on the Binance platform. This is in order to choose a winning trading strategy through which you can ensure that your profits are greater than the fees and losses. Below you can learn about the fees on Binance through a table.
Note how fees differ between taker and maker. In digital currency trading, a maker is a maker Liquidity. This is the buyer who waits, for example, for the price of Bitcoin to reach a certain price point in order to buy. For example, the current price is $30,000, which places the buy order at $29,000. In this way, he becomes a liquidity maker, as he places a purchase order in the order book. Therefore, the fees for it become lower.
As for the taker, he is the one who takes liquidity from the register. He simply buys at the current market price. That's why he pays higher fees.
You can lower the fees you pay on Binance if you have BNB coins. These currencies can be used to pay fees, and you will then receive a discount. The more BNB you hold and the higher your trading volume, the greater the discount on fees. But this is optional. The platform's regular fees are very competitive with other platforms.
You now have a funded account on the platform, have passed the KYC procedures, know the basics, and want to trade futures.
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On the platform you can either buy long or sell short. There are several orders on the platform, the most famous of which are limit and market.
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A limit buy order is a maker's order, i.e. a liquidity maker. You place a buy order for Bitcoin at 29,900, for example. This means that the order will only be fulfilled if the price falls this far.
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A market order is a taker, which means that you buy at whatever the market price is immediately.
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On the platform, you can set a profit-taking or stop-loss strategy before entering into the deal. This is the biggest motivation for traders to prefer futures over the spot market. If the price falls to a certain extent, the deal is automatically exited. The opposite is also true, if it rises to a certain point, profits are made automatically. You can place a full or partial order, whether to stop loss or take profit, for example, by 50% or 75%, etc., etc.
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The platform also features abundant liquidity for all crypto currencies. Many digital currencies can also have their futures traded on the Binance platform. For this reason, it is considered the ideal choice for many traders. In addition to this, the platform is also characterized by security, so funds and profits can be withdrawn from it at any time.
