In contract trading, it's not just about considering profit and loss, but also about breaking down the expenditure and income parts.
Generally, for a standard contract trade, one must consider the opening price, take profit and stop loss prices, etc. The most important thing is to know where the expenditure part of a trade lies.
After opening a position, the user's trading expenditure consists of fees and funding costs.
Many new players ask me why a position that clearly should break even still results in a loss after closing; in fact, this loss comes from your fees, which you didn't account for when closing the position.
So how can we reduce this fee erosion?
The first method: When at break-even loss, set the position a bit higher.
The second method: Open the fee reduction (commonly known as rebate) privilege, which is only available to KOLs who cooperate deeply with Binance. Don't randomly seek out unfamiliar people to open this.
If you want to find out how much fee you've been charged, you can open the Binance APP -- Funds -- Contracts -- Today's Profit and Loss -- Funding Costs and Trading Fees to check your fees for the past year.
Sometimes there are also funding costs, which are a concern for users who hold contract positions for a long time. The calculation of funding costs is based on the real-time funding fee of the currency, with calculation times generally at 0:00 - 8:00 - 16:00.
The calculation of funding costs is similar to that of trading fees, both using position value × funding rate (fee rate) = funding cost (fee)
Users should find ways to reduce these extra expenditures in the future; on one hand, it can help earn more money, and on the other hand, it deepens the trading model, making it easier to earn big in the future.