Binance futures is a derivative product trading provided on the largest cryptocurrency exchange platform, Binance.
The choice of Binance futures amongst its peers is mostly due to the availability of intense trading action that matches whatever equity you might have combined with access to a larger array of leverage options.
Binance futures is a money-spinner if you can stomach whatever the market throws at you. But first, you must learn the basics, else you’d wander blindly in the derivatives market, putting your assets in grave danger.
Breakdown Of Binance Futures
The intricate nature of the Binance derivatives products interface makes its spot counterpart seem like a walk in the park.
On Binance Futures, the default interface is the USD-M. Here, you trade derivative products based on a USDT margin, and the trading can the contract can be open for as long as you want.
Coin-M is another Binance futures option. Unlike its USD-M counterpart, the former is a contract that’s settled in cryptocurrency. The timeline is not fixed. The great thing about Coin-M Binance futures is the opportunity to maximize profits when assets rise in value.
Beside the Coin-M tab is the Options tab. Options aren’t so different from the other Binance Futures as it affords users the chance to leverage price differences to their benefits. Mostly, the terms ‘call and put’ used differentiate Options from other Binance Futures variations.
The Binance Futures Interface requires some familiarizing. If you want more specific information about the market or other factors, the information tab is your best bet. Using this route, you can get real-time information on funding rate, index price, and other market data that are bound to come in handy.
The Binance Futures interface also lets you select your preferred contract, review the mark price, change the chart, and others. Beyond the obvious, the Binance Futures interface can be personalized as you deem fit.
Cross Vs Isolated Margin
On Binance futures, you have the opportunity to choose either Cross Margin or its Isolated counterpart. Cross mode allows your open positions access to your margin balance.
For instance, if you transferred $50 to your margin balance, this sum will be used to keep your different positions open to avoid liquidation.
The Isolated mode means a position can only use what’s specific to it. You don’t have to worry about the open position drawing more funds to stay open, but the risk of liquidation is higher.
Take Profit/Stop Loss
On Binance Futures, you don’t have to go through the rudiments of watching your open position round-the-clock. All you have to do is enter the take-profit price and stop-loss price. This way, if something happens while you’re away, funds and profit are safeguarded. Of course, you still need to keep an eye on other indices to avoid getting liquidated.
One of the reasons why Binance Futures remains attractive to the average crypto trader is the opportunity to leverage one’s margin funds to access more assets.
On Binance Futures, you can choose between 1x to 125x leverage. This allows you to access multiple times of your margin funds. The quantity of leverage available to every user differs with their margin balance.
Through Binance Futures leverage, you gain access to more resources that’s otherwise not possible. Of course, there’s more profit attached to trading this larger amount of assets.
The catch with leverage is the risk involved. The higher the leverage, the bigger the risk. So while the 20x and bigger leverage options might be tempting, liquidation is much higher.
Mark Price and Last Price
On Binance Futures, realized profit or loss of assets is conducted based on mark price and last price. Depending on your contract – long or short, the process takes the mark price and last price into consideration.
The last price is the contractual price. It’s the price when a position was opened on a margin trade.
The mark price is the price when a position is closed. The difference between both prices decides if a margin contract is profitable or ends up in loss.
Binance Futures can be a cash cow for any trader. Once you learn to navigate the many options while managing your risk properly.
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