Do you want to explore the cryptocurrency market through futures contracts on Binance but don't know where to start? This article will guide you on how to trade futures on Binance in detail from creating an account to executing your first trades on this platform.
Overview of Futures on Binance
Binance Future is part of the world’s leading cryptocurrency exchange, Binance – this is a form of trading that uses high leverage to maximize profits on Binance. This feature allows investors to buy or sell a cryptocurrency at a fixed price at a future point in time.
Trading Futures on Binance requires investors to make predictions about the volatility of a cryptocurrency without needing to own it, thereby allowing investors to profit from both rising and falling markets.
For example, an investor places a buy order for a Binance Future contract with a term of 1 week when they predict that the price of BNB will increase. If their prediction is correct and the price of BNB rises when the contract expires, they will profit from the difference between the buy and sell prices. Conversely, if the price of BNB falls, they will lose money corresponding to that difference.
How to open a Future account on Binance
To trade Futures on Binance, you need to open an account by following these steps:
Register: Access the Binance website or mobile app and click on 'Register'. Enter the necessary personal information and verify your account as required.
Identity verification: Binance requires you to verify your identity by uploading images of identification documents, such as a passport or ID card.
Activate the Future feature: After logging into your account, switch to the 'Future' tab and follow the instructions to activate this feature.
Set a password and security: Ensure that you set a strong password and enable additional security measures such as two-factor authentication to protect your account.
Deposit money into the Future account
Log into your Binance account.
Select the 'Wallet' section and choose 'Deposit' in the corresponding section for the cryptocurrency you want to deposit.
Select the wallet address or scan the provided QR code to transfer money from your wallet or from another exchange.
Wait until the transaction is confirmed and the money is credited to your Future account on Binance.
How to place Future trading orders on Binance
Below is a guide on how to place Future trading orders on the Binance exchange for beginners:
Choose contract type and currency pair: Access the Future trading page on Binance, select the contract type (e.g., BTCUSD) and the currency pair you want to trade.
Select order type: Binance offers types of orders such as market orders, limit orders, stop-loss orders, and take-profit orders. Choose the order you want and confirm.
Enter amount and price: Enter the amount of cryptocurrency you wish to buy or sell, and enter the price at which you want to execute the trade.
Confirm order: Confirm the information and conditions of the order, then place the order and wait for it to be executed.
Manage orders: After placing an order, you can monitor and manage your orders through the trading page on Binance.
Note: Futures trading can carry high risks and may not be suitable for everyone. Before participating, understand the risks and consider a trading plan to ensure the safety of your finances.
Risk management when trading Futures
Determine risk thresholds: Before starting trading, determine a risk threshold that you can accept (-5%, -10%, etc.). This helps better manage stop-loss when the market moves against expectations.
Use stop-loss orders: Always set stop-loss orders to minimize losses when the market moves against your predictions. Stop-loss orders will automatically sell or buy assets when the price reaches a defined threshold.
Diversify: Do not put all your money into one cryptocurrency or a single order. Spread your capital across multiple currencies to disperse risk when investing.
Understand profit and risk: Before participating in Futures trading, thoroughly understand how to calculate profits and risks of futures contracts, and consider carefully before deciding to place an order.
How to trade Futures on Binance – Read more
Effective Futures trading strategies on Binance
Everyone will have a different way of trading Futures, but the most important thing is to take the time to research to understand this feature, and then apply it to your investment process.
Here are some trading strategies that investors can refer to:
Research and analyze: Take the time to research and analyze the market before making trading decisions, using technical analysis tools to accurately predict market conditions or the specific currency you are interested in.
Implement risk management: Apply the risk management principles mentioned above to protect capital and optimize profits.
Focus on accurate orders: Selectively review trading opportunities and concentrate on placing orders with high success probabilities, using the future feature should not be participated in without careful consideration, trading based on others, etc., but rather conduct thorough research.
Implement a trading plan: Create a specific trading plan and adhere to it strictly. This will help you avoid decisions or actions that depend on emotions.
Notes when withdrawing money from the Future account
Not only Binance but almost all cryptocurrency exchanges will have a fee schedule for trading, depositing, and withdrawing money that investors need to understand.
The trading fees for the Future method on Binance are relatively low, specifically:
Spot trading fees (Maker/Taker): 0.1%.
Futures contract trading fees USDⓈ-M: 0.02% – 0.04%.
Futures contract trading fees COIN-M: 0.015% – 0.04%.
Here are some important notes when withdrawing money from the Future account:
Check fees and conditions: Before making a withdrawal, check the fees and conditions applicable to withdrawals from your Future account on Binance.
Account verification: To ensure security, Binance may require you to verify your identity before allowing withdrawals. Following the exchange's requirements helps ensure account safety and allows money to be credited quickly.
Choose a withdrawal method: Currently, Binance supports many withdrawal methods suitable for the needs of many people, such as bank transfer, e-wallet, or other payment methods. Depending on your needs and strategy, you should consider choosing a suitable method, and do not forget to pay attention to withdrawal fees to calculate the exact costs.
Check information and withdrawal amount: Before confirming the withdrawal, carefully check the information and the amount you want to withdraw to avoid confusion or unwanted errors.
Note: Before making any financial transactions, be sure to learn about the risks along with regulations and investment policies. Ensuring that you have a detailed plan and a good grasp of risk management principles will ensure effective investment in the cryptocurrency market.
I hope the way to trade futures on Binance shared above has helped you somewhat on your investment journey. However, remember that investing always comes with risks, and mastering knowledge and risk management is the key to achieving success. Always self-research and stay updated on market information, as well as utilize the tools and features that Binance provides to optimize effective trading strategies.
Disclaimers: The content is for reference and informational purposes only, not investment advice.
