In this post, I’ll take you through a complete review of the Binance Futures trading platform.
Binance is the most popular cryptocurrency exchange in the world. And it makes cryptocurrency futures trading easy and profitable.
Futures trading, as you may well know, is a high-risk trading tool, but it helps you to make a bulk of profit when used responsibly.
By the time you are done reading this post, you must have become a well-grounded Binance Futures trader.
So, without further ado, let’s get started!
This is the list of what I intend to cover:
- What is Binance Futures?
- Features Of Binance Futures Trading Platform
- Futures Trading Products And Services
- Types Of Futures Contract On Binance Futures
- Supported Contracts, Cryptocurrencies And Countries
- Transaction Fees And Verification Requirements
- Customer Support Channels
- How To Trade Futures On Binance
Enjoy your reading!!
1. What Is Binance Futures?
Binance is the world’s most reputable crypto exchange, founded in July 2017 by Changpeng Zhao, a prominent figure in the crypto space.
Although it was founded in 2017, it officially debuted its futures trading platform in September 2019.
The Binance Futures trading platform was created to allow users to short or long a crypto asset by speculating on its price movement.
For the sake of clarity, Long means “Buy”, while Short means “Sell” in futures trading.
Interestingly, Binance Futures allows you to perform your trade with more money than you have – a term referred to as “Leverage” in crypto trading.
Now, it’s important to note that Binance Futures is not like the conventional “Spot” trading platform you’re familiar with.
Therefore, you need to be a professional crypto trader before you start using it.
But, don’t fret yet. I have created this post to help you through.
Another thing is that when you trade futures, you are not actually trading tangible assets.
Instead, you are speculating on the price direction of an underlying asset, such as Bitcoin.
Binance also offers a plethora of services which are detailed in this article.
This concludes this section. You may now scroll down as I continue to walk you through this post.
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2. Features Of Binance Futures Trading Platform
- Intuitive UI
- Hight trade volume
- Increased security
- Fee discounts
- High liquidity
- Over 90 Futures contracts available
- Up to 125X leverage
- Mobile App
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3. Futures Trading Products And Services
Binance offers 2 major futures trading products, which are:
This simply means “USD stable coin margin”.
It is the product on Binance that enables you to perform futures trading using 2 stable coins as the quote and settlement currency:
On the other hand, this product means “Coin Margin”.
It enables you to open a position with a cryptocurrency and have the position settled in the same cryptocurrency.
Here, you can open your position with a plethora of cryptocurrencies.
Note that I mentioned the term “Margin” here.
Margin is the same as leverage, which I explained at the beginning of this post.
Leverage, also known as margin trading, allows you to trade with more money than you have as capital.
On Binance Futures you can get up to 125X leverage. Enticing, huh?
Well, it also comes with high risk and high return. I will explain below.
You see, leverage allows you to multiply your trading capital.
Let’s say you have $5000 as your trading capital.
If you use a 5X leverage, your position will automatically open at $250,000.
Fortunately, a 5% profit will net you $12,500, but a loss of close to 5X will wipe out your whole trading money.
It’s also worth noting that “Coin-M” carries a higher level of risk than “USD(S)-M.”
This is because cryptocurrencies are volatile, which means that a price drop will also affect your position in a trade.
Scroll down to continue your reading!
4. Types Of Futures Trading Contract On Binance Futures
There are two types of futures contracts available on Binance Futures:
- Delivery (Futures) Contract
- Perpetual Contract
Delivery (Futures) Contracts
Basically, when you enter into a delivery contract, you are agreeing to buy (Long) or sell (Short) an asset at a specific price and date in the future.
The contract expires or is settled once the date is reached.
Assuming that from your technical analysis, you forecast that the price of BTC will hit $60K in December 2021 from its current price of $50K in August 2021.
You may decide to enter into a futures trading contract with your co-trader on Binance.
In the contract, you both agree that he (co-trader) will sell 1BTC to you for $50K on December 1, 2021.
Keep in mind that you are going “Long” on the contract this time, while your co-trader is going “Short.”
Moving on, when the agreed date is reached, the co-trader must sell the 1BTC to you for the agreed price, which is 50K.
- If the price of BTC goes according to your forecast, you will make an extra $10K in profit, while the co-trader will lose $10K in profit.
- However, if the price of Bitcoin falls short of your projection and trades at $45K on the specified date, your co-trader will profit $5K while you lose $5K.
It’s worth noting that once you sign the contract, the specified date is irreversible, and the trade will only take place on that date.
Lastly, Binance delivery futures contracts have a preset expiration date that is set to occur quarterly, that is every 3 months.
This is the type of futures trading that enables you to predict the price of a crypto asset without a settlement or expiration date.
What this means is that you can open, hold and close your contract at any time you want.
Simply put: There is no specified date for the contract settlement.
The Perpetual Contracts do offer more flexibility, but it also comes with a higher risk of liquidation.
I’ll explain what liquidation is and how it can happen in Perpetual Futures Contracts in the FAQ section.
5. Supported Contracts, Cryptocurrencies And Countries
Supported Contracts and cryptocurencies:
- Binance supports the following contracts for USDⓈ-M
2. Over 90 contracts are available for COIN-M including:
- KANAUSDT and plenty more
Binance is a global exchange which means that it is available worldwide.
However, Binance Futures is not available to users in these countries:
- Hong Kong
- United Kingdom
- Ontario (Canada)-based user
Let’s dive into the next section. Continue reading!
6. Transaction Fees And Verification Requirements
Binance Futures fees vary depending on whether you are a “Taker” or a “Maker.”
- Maker: These are traders that supply liquidity to the market by placing “Limit orders” below or above the current price.
- Taker: These traders, on the other hand, place “Buy/Sell” orders at the market price. They are called takers because they remove liquidity from the market
Basically, makers pay less in fees than takers since they supply market liquidity.
Binance Futures fees range from:
Maker – 0.02000% – 0.0000%
Taker – 0.04% – 0.017%
Maker – 0.01% – 0.009%
Taker – 0.05% – 0.024%
There is also a discount fee of up to 20% based on your BNB holdings and 30-days trading volume.
You may see them all at a glance in the screenshot below:
You may see them all at a glance in the table below:
- Email Address
- Phone Number
- Government ID
- Facial Verification
You can scroll down and continue your reading!!
7. Customer Support Channels
If you have further questions or issues concerning this exchange, please contact them by:
- Clicking on “Submit a request” or the “Chat box” icon on the left bottom side of the platform’s interface.
- Clicking on ” Give us a feedback” to submit proposals or request
Binance can also be contacted through the following social media platforms:
- Twitter -https://twitter.com/binance
- Facebook – https://www.facebook.com/binance
- Reddit – https://www.reddit.com/r/BinanceExchange/
- Telegram – https://t.me/binanceexchange
- Instagram – https://www.instagram.com/binance
You can also look through the “FAQs” and “Self-Service” options to determine whether the problem is one you can address on your own.
Binance has an extremely responsive customer service team.
The team typically responds to question within a few hours or within 24 hours of receiving them.
In the next section, I’ll show you how to navigate Binance Futures and how to place trades.
Let’s dive in!
8. How To Trade Futures On Binance
In this section, I’ll show you how to use Binance Futures to place orders or enter a position.
- Go to Binance and “Register” for an account to get started.
2. Verify your account up to the “Intermediate level” at least.
3. Select “USDS-M or COIN-M” from the Derivatives drop-down menu, and you will be taken to the futures trading platform.
4. Determine the futures product you want to trade and fund your futures accordingly.
You can easily do this by going to the bottom left-hand side of the trading interface, then select “Transfer” to send funds from your “Fiat and Spot” wallet to your futures wallet
5. Decide whether you want to trade “Delivery or Perpetual” futures and select the contract of your choice.
6. Choose your leverage carefully. It can be found on the trading interface’s upper left-hand side (it comes with a number followed by “x”).
Note that you can adjust your leverage by moving the bar icon.
7. Select a margin mode. It is normally set to “Cross” by default, but you can change it to “Isolated” mode by clicking on it.
Cross – This is a margin mode that funds your positions simultaneously from available funds in your futures wallet.
Isolated – Here each position is funded with a specific initial margin that is not tied to the funds in your futures wallet.
8. Select your position mode from the “Preference” menu. This can be done by selecting the icon that you will see in the screenshot below.
One-way mode –This allows you to only open one direction of a contract. For example, if you’re in a “long” position, you won’t be able to open a “short” position.
Hedge mode – This mode allows you to open a position in both “long” and “short” at the same time.
9. Decide on the asset’s price and size, then select your preferred order type.
Binance Futures supports 7 order types:
- Limit Order
- Market Order
- Stop Limit
- Stop Market
- Trailing Stop
- Post Only
You can learn how they work here.
Another feature I’d like to highlight is the “Reduce-only” and “TP/SL” functions which are visible around the side where you enter your order,
Reduce only – By ticking this option you can only reduce your position in a trade. For example, if you open a long position for 1 BTC, you cannot open another trade for more than 1 BTC.
TP/SL – Also known as bracket order is your “Take profit and Stop Loss” order. Learn more about it here
10. Lastly, Place your order by clicking on the “Buy/Long” or “Sell/Short” button.
When you have placed your order, you will find its details at the bottom of the trading interface.
Before I wrap up this part, I’d want to point out that Binance provides a crypto trading bot.
The bot is called “Grid Trading” which can assist you in automating your futures trading.
Learn more about it here.
Don’t leave just yet. Continue to the next section.
This is when an exchange forcefully closes your open orders because you do not have sufficient funds to keep your trade open.
To explain further:
Let’s say you have 5 BNB and want to buy 25 BNB with a 10X leverage.
The 5 BNB represent your “initial margin,” or collateral.
When your trade has been placed, a “Maintenance margin” is used to keep your trade-in check.’
A maintenance margin is the minimum amount required to keep your trades open.
And it is influenced by the market price and the total balance of your open position.
If your total balance falls below the maintenance margin, the exchange will liquidate you to prevent further losses that could affect your leverage.
However, in most cases, if your total balance falls near the maintenance margin, the exchange will issue you a “margin call” asking you to increase your initial margin to retain your position.
Also note that the higher the leverage you use, the closer the liquidation price is to your position.
Trading tip: One strategy to avoid getting liquidated is to set your “Stop loss and Take profit” orders.
Binance recognizes how risky futures trading can be, and as a result, it has put in place tools that will assist its users in making win-win trades.
These tools include:
1. Anti-Addiction Notice
2. Cooling-Off Period Function
3. Price protection
4. Auto-Deleverage Liquidation Indicator
5. Insurance Funds
You can find out more about these features here.
Now, this indicates that the exchange cares about the protection of its users’ funds and does not trade against its users.
With high liquidity, multiple contracts, low fees, and high liquidity, Binance Futures is undoubtedly one of the best platforms for futures trading.
This is where I’ll bring this post to a close.
I hope you’ve now grasped futures trading on Binance Futures.
If so, you can tell me:
What is your view of Binance Futures?
Do you have any further questions concerning the platform?
Drop your comment in the box below.
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