Exploring Dual Investment’s New Auto-Compound Feature
Main Takeaway
With Dual Investment you have a chance to buy crypto at a lower price or sell crypto at a higher price in the future, while earning rewards.
In order to earn compound interest using Dual Investment, users must re-subscribe to a new Dual Investment position at or after the Settlement Date.
The new Auto-Compound feature takes the work out of rolling over new “Buy Low” and “Sell High” positions yourself.
If you opt for the Advanced Plan, Binance will automatically subscribe to a new position when the Target Price is reached.
Automating the compounding process can be a real time saver. If you’re using Dual Investment, its new feature can help you reinvest by removing the hassle of manually subscribing .
Compounding is an age-old financial concept. In fact, it’s such a fundamental you’ll almost certainly have covered it in math class at school. For example, with a traditional savings account, compounding implies you simply take your interest earned and reinvest it. With each period you earn, you take those gains and put them back into whatever is generating you income. So, rather than making a constant rate of return, you earn one that is constantly increasing. Brought back some memories yet?
But how does compounding work for Dual Investment?
When it comes to Dual Investment, compounding does not only exponentially increase the opportunity to earn crypto rewards, it also exponentially increases the risk for principal loss.
That’s why you should seriously consider your risks when subscribing to any products that offer compounding, especially Dual Investment.
Let’s then look at how Dual Investment and its auto-compound feature work and examine the risks associated with the Dual Investment Auto-Compound feature.
How Does Dual Investment Work?
Binance Dual Investment provides a chance in the future to buy crypto at an agreed price in the future. It also lets users earn yield during the subscription period, regardless of how the market moves. Dual Investment can be seen as an alternative to spot trading with limit orders on the Binance trading platform.
Dual Investment has two products: Buy Low and Sell High.
Buy Low products provide a chance to buy a target crypto in the future at a lower price. Sell High products provide a chance to sell your existing crypto in the future at a higher price.
Two common Dual Investment strategies
Dual Investment offers a variety of strategies you can employ depending on your view of the current state of the market. These two are the most common:
Buy Low or Sell High: For users who would like to buy for a lower price or sell for a higher price. Dual Investment is an attractive option here as there are no trading fees, and it allows you a chance to earn crypto interest on your buy or sell order.
Growing HODLed crypto or stablecoin stash: For users who don’t have the intention to buy or sell but want to earn crypto interest.
As always, investing has an inherent risk. These strategies should only be used by experienced investors who feel comfortable in volatile markets.
Our support article has all the details you need to learn more about how Dual Investment works. If you’d like to explore our strategies further, you can find a selection in our Academy article.
So How Do I Use Auto-Compound with Dual Investment?
If you hadn’t already spotted it, Dual Investment has two opportunities for auto-compounding. First, you always gain interest that can be reinvested when your Target Price isn’t reached. Second, you may also make some gains to reinvest by buying or selling your crypto through the product after your Target Price was reached. You could, of course, do all this manually. However, that takes time and effort to do and can be more efficiently handled through automation.
BTC and ETH settlement dates occur every Tuesday and Friday. All other digital assets have Settlement Dates on Fridays. You can turn on/off the Auto-Compound feature up to 30 minutes before the Settlement Date.
Two plans offered by Auto-Compound
Basic Plan
If your Target Price is reached, Auto-Compound will stop, close the position, and distribute the returns. If the Target Price isn’t reached, Auto-Compound will create a new position that compounds your gained interest.
For example, your Sell High position will roll on to a new Sell High position with the next available Settlement Date.
Advanced Plan
If the Target Price is reached, the system will automatically subscribe to a new, opposite position with settlement on the next available Settlement Date. If the Target Price isn’t reached, the system automatically subscribes to a new position with settlement on the next available Settlement Date. The product will, however, stay the same.
For example, you subscribed to a Buy Low product, and the Target Price isn’t reached. Auto-Compound will open a new Buy Low position for you. If the Target Price is reached, it will open a new Sell High position.
Compounding Can Be a Time Saver
If you’re a fan of Dual Investment already and want to reinvest your position after the settlement date, Auto-Compound takes the hassle out of doing it yourself.
However, you should seriously consider whether reinvesting is correct for your risk tolerance and strategy. Sometimes it may be worth just HODLing your gains. Not only can Auto-compounding lead to more gains but also to more losses, so please make sure to research the feature thoroughly.
For more detailed information on how to use Dual Investment Auto-Compounding, as well as the terms, conditions, and risks, refer to the following FAQs and guides:
(Academy) A Quick Guide to Binance Dual Investment
(Academy) Top 6 Dual Investment Trading Strategies
(Acacemy) A Beginners Guide to Understanding Risk Management
Disclaimer: For Dual Investment products, the reward that you will be able to receive is fixed, and will be distributed according to the advertised Deposit Currency APY*. You may be better off holding your cryptocurrency, and may be required to trade your cryptocurrency at a less favorable rate of exchange than the market rate on Settlement Date. Binance does not assume liability for any losses incurred from price fluctuations.
*APY refers to cryptocurrency rewards in Deposit Currency, not actual or predicted returns in fiat or the Target Currency.