Why Crypto Holders Should Consider Trading Futures On Binance
Futures trading is one of the best choices for cryptocurrency enthusiasts. Derivatives contracts are contracts that indicate the value of a certain asset that traders can purchase or sell at a defined price at a future stage.
With the popularity of Bitcoin and other cryptocurrencies on the rise, now is an excellent moment to consider trading futures. While there are thousands of trading platforms available, the fact is that futures trading isn’t always as straightforward as it looks due to the necessity for cash management and leverage. We’ll look at why now could be a good time for crypto holders to consider trading futures on Binance in this article.
Although many people are waiting to see if the crypto markets will rise or fall, others are taking advantage of a new way to profit from crypto. On Binance, you may trade futures, which gives you a unique opportunity to benefit no matter what the market does.
Traders of futures have a one-of-a-kind opportunity to profit regardless of market direction. Futures traders can benefit from price gains not just in terms of increasing their portfolios, but they can also go short when the market is in the red.
Futures trading is used by many traders as a hedge against spot markets. Market-neutral trading methods are available with derivatives contracts, which may be sold high and bought low to benefit from the price difference. Because of the large returns that may be realized from minor fluctuations, there is no need to worry about cryptos being bullish, bearish, or stationary while trading futures.
By default, the ability to use borrowed cash, or leverage, boosts a trade’s profitability. A trader with a $100 account balance might borrow $900 and utilize 10x leverage to take a $1,000 long or short bet. If the deal goes in his favor, a 10% price movement might help him increase the account’s starting balance in a matter of time.
How to Register for a Binance Futures Account
If you already have a Binance account, all you have to do is go to the mobile app or web application and click the “future” button. If you do not already have a Binance account, you must first create one and verify your identity.
The Difference Between Spot And Futures Trading
You’ll understand the main differences between trading in these two markets now.
_Futures and Spot Prices: The spot price of a cryptocurrency on the spot market is the price that governs all spot transactions. Crypto spot prices are determined by buyers and sellers through a supply and demand economic mechanism. The price of a futures contract, on the other hand, is determined by the current spot price plus the cost of carrying in the interval before delivery. The basis is a futures contract’s cost of carrying. A positive or negative number might serve as the foundation. In a positive basis relationship, the futures price is greater than the spot price, and vice versa.
_With trillions of dollars in monthly activity, the futures markets offer huge liquidity. The Bitcoin futures market, for example, has a monthly turnover of $2 trillion, much exceeding the trading volumes of the Bitcoin spot exchanges. It's high liquidity aids price discovery and helps traders deal quickly and effectively in the market. Because there is always someone willing to take the opposing side of a particular position, a liquid market is often linked with lower risk, and traders will experience less slippage.
_Traders are attracted to the futures market because of the leverage. Futures trading is particularly capital-efficient because of leverage. For example, to buy 1 BTC on the spot market, you’d need thousands of dollars — $50,000 at the time, based on the current market prices. By using a futures contract, you can begin a BTC futures trade for a fraction of the cost. Only via the utilization of leverage is this feasible. The more leverage you have, the less money you need to put into a position. Spot trading, on the other hand, does not provide leverage. Assume you only have USD 5,000 on hand. In this situation, you could only afford to buy USDT 5,000 worth of Bitcoin.
_When you buy Bitcoin on the spot market, you can only make money if prices rise. In a bad market, however, you cannot profit. Futures contracts enable you to profit from short-term price fluctuations either way. Even if the price of Bitcoin decreases, you may profit from the trend by trading along with it. Traders may use futures contracts to create complex trading techniques, including short-selling, arbitrage, pair trading, and more. Futures contracts are also used to safeguard a portfolio from high price volatility and to hedge against negative risk. Futures contracts are frequently used by miners and long-term investors to safeguard their portfolios against unexpected dangers.
Futures As A Hedge
For a single contract, you may use Hedge Mode to hold both long and short positions. What makes you think you’d want to do anything like that? Let’s pretend you’re positive on Bitcoin’s long-term price, so you’ve opened a long position. Simultaneously, you might want to take short positions in shorter time periods. Hedge Mode enables you to do precisely that. In this scenario, your fast short positions will have no effect on your long position.
One-Way Mode is the default position mode. This implies that for a single contract, you can not open both long and short positions at the same time. It would be impossible to do so since the positions would cancel each other out. As a result, if you wish to use Hedge Mode, you’ll have to manually activate it.
Market-Neutral Trading Strategies
A market-neutral trade entails opening long and short positions at the same time in order to take advantage of inefficient pricing between crypto-assets. Profit is calculated based on the relative price change of two assets rather than the direction in which they move.
If a trader feels Bitcoin is overvalued and Litecoin is undervalued, for example, he or she would establish a long position in Litecoin and a short position in Bitcoin. In other words, it is a non-directional trading method that allows traders to benefit regardless of whether the market is bullish or bearish.
Market-neutral strategies are ideal for today’s extremely volatile crypto markets, particularly in light of recent. Market-neutral trading methods, unlike traditional arbitrage, are not risk-free. However, the strategy has a number of advantages that allow a trader to enhance returns without necessarily increasing risk.
Leverage is an important instrument in both traditional and crypto markets. It improves capital efficiency by removing the need for traders to lock up large amounts of funds. Together with futures and options, they aid in the introduction of liquidity into the market. Users must always use caution when using leverage since it raises both possible profits and risks.
How Do You Adjust Your Leverage?
You may manually adjust the leverage for each contract on Binance Futures. Go to the top left of the page and hover over the current contract to choose it (BTCUSDT by default).
Go to the order entry field and click on your current leverage amount to adjust the leverage (20x by default). Adjust the amount of leverage with the slider or by entering it in, then click [Confirm].
It’s worth mentioning that the amount of leverage you may utilize decreases as the size of the position increases. Similarly, the more leverage you can use, the smaller the position size will be.
Please keep in mind that utilizing more leverage increases the risk of liquidation. The amount of leverage that novice traders utilize should be carefully considered.
Trading Futures On Binance Futures Has A Lot Of Advantages.
_Binance Futures also offers a large range of leverage for accounts with balances ranging from $0 to $50,000, allowing any trader to expand their portfolio regardless of their account balance.
_Binance Futures has a wide range of cryptocurrencies to choose from. Over 530 crypto-to-crypto trading pairings operate, allowing users to exchange everything from DeFi tokens to meme coins. To give traders the optimal trading experience, new coins are continually added.
_Binance Futures also have a very cheap charge structure, which is a big plus. Maker/taker costs can be as low as 0.000% or 0.0175%, allowing traders to keep more of their hard-earned earnings. By actually holding BUSD or BNB, these fees can be significantly reduced.
_Binance users may also relax knowing that their funds are SAFU. Its insurance fund has almost $300 million in it to safeguard bankrupt traders from negative losses while also ensuring that successful traders get paid in full.
_Binance provides support in 17 different languages, as well as an immensely intuitive and simple-to-use user interface, allowing traders from all over the world to join the crypto revolution.
_Binance Futures has grown to become one of the market’s most liquid derivatives markets. Traders may rest assured that their buy and sell orders will be completed quickly and without slippage.
_Binance has developed one of the most secure trading platforms in the world, with features like KYC, 2FA, and Anti-Phishing Code that help users protect themselves from malicious actors.
Have you signed up for Binance’s future yet? There are a lot of cryptocurrency opportunities that you’re missing. To join, go HERE!
You may purchase cryptocurrency with cash from Binance via a bank transfer or credit card, or through other Binance P2P merchants.
P2P Buy/Sell https://p2p.binance.com/en?ref=36687617
There are a lot of reasons why cryptocurrency investors should consider trading futures on Binance. First and foremost, Binance futures are an excellent way to reduce risks in the cryptocurrency market. Second, futures on Binance allow you to take either a long or short position, which means you may use futures to make money when the market rises or to protect yourself against a loss when the market falls. Third, Binance’s futures costs are relatively low, with long transactions costing 0.10 per cent and short trades costing 0.20 per cent.