Here is a basic guide for trading cryptocurrency futures on Binance. This type of trading involves leverage and higher risk, so it's important to understand the concepts before starting.
Guide to Trading Cryptocurrency Futures on Binance
1. What are cryptocurrency futures
Futures are contracts that obligate you to buy or sell an asset (in this case cryptocurrencies) at a future date and at a predefined price. On Binance, you can trade two types of futures:
USDT-Margined Futures: Use USDT or BUSD as collateral.
COIN-Margined Futures: Use the underlying cryptocurrency as collateral.
2. Initial requirements
1. Binance account:
Create an account on Binance (link to Binance).
Verify your identity (KYC).
2. Activate the futures account:
Go to the "Derivatives" section and click on "Futures."
Activate your futures account.
3. Transfer funds to your futures account:
Go to "Wallet" > "Transfer".
Transfer USDT, BUSD, or another accepted cryptocurrency as margin.
3. Key concepts
1. Margin: The amount you need to deposit as collateral to open a position.
2. Leverage: Multiplies your market exposure. Example: With 10x leverage, a 1% change affects your position as if it were 10%.
3. Liquidation price: If the market price reaches this level, you lose all your initial margin.
4. Long position: You profit if the price goes up.
5. Short position: You profit if the price goes down.
6. Funding rates: Paid every 8 hours to balance the price between the futures market and the spot market.
4. How to open a trade
1. Select the futures market:
Go to "Derivatives" > "USDT-M Futures" or "COIN-M Futures."
2. Set the leverage:
Click on the leverage symbol (e.g., 20x) and adjust to your desired level.
3. Choose the type of order:
Market order: Buy or sell at the current price.
Limit order: Buy or sell at a specific price.
Stop-limit order: Set an order to activate when a certain price is reached.
4. Open a position:
Enter the amount and confirm whether you want to open a long or short position.
5. Risk management
1. Use stop-loss: Set a level to automatically close the position if the market moves against you.
2. Do not use excessive leverage: While it can increase profits, it also increases losses.
3. Diversify: Don't invest all your capital in a single trade.
6. Monitor and close the position
Monitor your open positions in the "Positions" tab.
Close a position manually when you see fit or let your take profit or stop-loss order execute.
7. Associated costs
1. Trading fees: Depend on your VIP level at Binance. Generally, they are 0.02%-0.04% per trade.
2. Funding rates: Apply every 8 hours and can be positive or negative, depending on the market.
8. Practical tips
1. Practice on the demo account: Binance offers a futures simulator where you can practice risk-free.
2. Stay informed: Monitor market news and updates on cryptocurrencies.
3. Start with low leverage: Learn before taking on greater risks.
9. Warning ⚠️
Futures trading is highly speculative and can result in significant losses, especially if you use leverage. Make sure to fully understand the risks before trading.
