How to use the Binance futures trading platform?

“Thanks to crypto curbs, India missing out on multiple $50-100B listed firms”, says Binance CEO.

Well, the bitter truth! Indians tend to stay away from highly volatile assets. Bitcoin is a whooping example of the same. Many Indians even speculate stepping into futures and options.

However, if going in the wrong direction, these assets can drain a large sum of your hard-earned money. So first, let’s make a few things clear.

But first, you need to understand, “Where did Bitcoin come from”?

What is a Future?

A Future is a derivative, i.e., an underlying asset that gets its value from the prevailing asset. A few examples include equity futures, gold futures, commodity futures, and bitcoin futures. Here, equity futures gain their value from the main equity itself.

E.g., TCS futures gain their value from the share price of TCS.

What is a Bitcoin Future?

A Bitcoin Future is another derivative that follows the price action of the world’s largest digital asset. An investor without paying for the entire amount can gain access to the underlying technical gold using leverage and margin.

Let’s assume I get an email from Satoshi Nakomoto (you know it’s cryptic), saying Bitcoin would surge in the coming days. Or Elon Musk tweets about Bitcoin. This leads to a massive buying potential amongst young investors, which leads to a price rally.

This means you know that the price would shoot up in the coming future and enables you to buy a Bitcoin Future or a future contract.

You can even short the futures contract if you feel the prices would plummet in the coming times.

So you are committing to buying or selling the underlying asset at a predetermined price in the near future.

Binance Futures caters to your urge to enter into a futures contract.

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Perks of Entering into a Contract

Leverage

This daunting word can even change your life if taken in the right amount at the right time. You can gain significant exposure in Bitcoin by chipping in only a fraction of the total amount using Binance Futures.

You can leverage up to 125 times the initial margin. Every ₹1 in the trading account can buy up to ₹125 worth of BTC in layman’s terms. A small movement in the price can gain you a large sum of money.

Pliability

For non-Bitcoin holders, Binance provides a simple and flexible approach towards investing in futures. You can open your position and settle it using USDT – Tether, another cryptocurrency whose value is derived from the US dollar itself.

Liquidity

Bitcoin futures are the most liquid kind of assets available in the entire crypto market. Liquid markets assure us that there is always someone on the other side of the trade to curb risk and slippage, making it profitable for any investor.

Portfolio Diversification

‘Don’t put all your eggs in one basket.’ A prudent investor, be it Warren Buffet, Charlie Munger, Peter Lynch, has given utmost importance to a diversified portfolio.

A varied wallet gives you an upper hand in a bear market as well. Investing across assets such as equity, options, futures, mutual funds would always prove to give you a high return on investments. The same follows for the crypto space as well.

Binance Futures Perpetual and Binance Futures Quarterly

So by now, I am sure you can explain Bitcoin futures to your 5 yr old sibling as well with precision. Let’s dive into greater depth.

Binance offers two kinds of Future products – Bitcoin Futures Perpetual and Bitcoin Futures Quarterly.

These two products differ in their funding fees and expiration. Okay, but what are funding fees? Expiration? The catch lies in their names themselves.

Let’s have a closer look.

Expiration

Bitcoin Futures Quarterly has an expiration date.

E.g., the BTCUSD Quarterly 0925 contract has expired on 25 September 2020. However, Bitcoin Futures Perpetual does not expire.

Funding Fees

A funding rate has been defined to close the price gap between the Futures Quarterly market and the underlying commodity. As opposed to traditional futures contracts, perpetual contracts never expire.

Due to this, crypto exchanges are obliged to maintain a mechanism to ensure that the contract prices correspond to the index.

Funding fees are periodic payments to traders paid peer-to-peer. Binance takes no funding fees as it is a transaction between 2 users.

Thus, depending on which side of the trade the user lies, he/she would receive or pay the fees.

One can gain insights into ‘how to track historical funding rates,’ ‘how to receive notifications from Binance,’ to get a broader view.

‘Why Binance?’

With a market cap of 6.4 billion dollars, this four-year-old crypto platform has made its way in every nook and corner of the world by providing unique and reliable services, making it one of its kind.

  • A simple UI
  • High Liquidity and Volume
  • One-stop Platform
  • Secure and safe

These are some of the reasons for Binance to become a technical giant in its league.

Steps for selling/shorting/buying using Binance Futures

Following is a step-by-step tour of how you can sell/short or buy/long Binance Futures with just five steps:

  1. Open a Binance account. Binance offers a clean and simple method to open a verified account.
  2. Add your required amount into the account to start trading. Binance offers a transparent peer-to-peer system to buy crypto from unknown users without the hassle
  3. Choose your desired contract that you want to enter into. If you want to trade BTCUSDT perpetual contracts, please select USDⓈ-M Futures. For BTCUSD coin-margined contracts, select COIN-M Futures.
  4. Select your Leverage judiciously. The default setting in Binance is 20x. However, you can adjust according to your needs.
  5. Finally, click on the red or green button to sell or buy your contract respectively

EARN WHILE YOU SLEEP

You can also check this comprehensive video to know how to trade on Binance futures?

Conclusion

‘Join the world’s largest crypto exchange,’ Binance surely wants us to participate in this novice, magical world of cryptocurrencies and is hereby our aid. With this concludes our article on ‘How to use the Binance futures trading platform.’

I hope this article helps you and if you have any queries related to it, leave your comment below. If you have not joined our community then you can now. We are very active there and have been sharing important information there.

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About The Author: Shounak

Blogger, Writer, Cryptocurrency Trader and Tech Geek.