I wrote this article for my FB group because there were questions about how to navigate BINANCE Futures. Now I have decided to post it here. I hope it will be useful to someone.
Important: The information on this page is only a description of the author's private experience in trading FUTURES on the Binance exchange and is only intended to provide technical instructions on how to use this instrument.This article neither in whole nor in part constitutes a "recommendation" within the meaning of the Act of July 29, 2005 on trading in financial instruments or the Regulation of the European Parliament and of the Council (EU) No. 596/2014 of April 16, 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6 / EC of the European Parliament and of the Council and Commission Directives 2003/124 / EC, 2003/125 / EC and 2004/72 / EC and Commission Delegated Regulations (EU) 2017/565 of 25 April 2016 supplementing Directive 2014/65 / EU of the European Parliament and of the Council as regards organizational requirements and operating conditions for investment firms and defined terms for the purposes of this directive. The content contained on the website does not meet the requirements for recommendations within the meaning of the above-mentioned act, incl. do not contain a specific valuation of any financial instrument, do not rely on any valuation method, and do not identify investment risk.
The website administrator is not responsible for investment decisions made on the basis of the information contained herein. Readers make investment decisions at their own risk. Investing on Binance FUTURES is a very risky instrument. Using it may even result in the loss of 100% of the invested capital. I recommend it to anyone who wants to try using small amounts for the FUTURES wallet.
Anyone who has started the adventure with cryptocurrencies and the Binance exchange, when he has already bought his first cryptocurrency, later sold it at a profit, starts looking at the next tabs on the stock exchange. There is, among other things, a futures tab for trading futures.
The most important thing: We don't buy bitcoin or any other cryptocurrency in futures contracts! It is only possible to determine it, we bet on the further movement of its price.
It is a mechanism similar to futures contracts on stock exchanges or on the Forex market. I will not explain the whole philosophy of futures contracts here. It will be a purely technical manual, based on screenshots from the application, because it was easier for me. I think that the view is similar and people using the computer or the pc binance application will also be surprised how to open and close positions. I warn you right away that the tools you want to get started with are risky. However, you can control it by setting the amount you want to risk yourself, as well as by wisely operating the lever and setting SL orders. A short definition here. Leverage allows us to set a position greater than the capital we have. In the binance exchange, the levers can be set at different levels for different trading pairs. For bitcoin related btc / usdt or btc / usd contracts it can be up to 125 X! We come to the point
The first thing we need to do is check our portfolio. As you can see in the screenshot above, we have a transfer button there. This option is used to transfer money or cryptocurrencies from one wallet on the Binance exchange to another. The binance exchange runs for us separate portfolios for traditional trading, i.e. spot trading, and separate for futures trading. So if you have been buying and selling cryptocurrencies so far, you probably did it via the spot wallet. If you want to switch to futures trading, you must transfer some of your money / USDT or cryptocurrencies to your futures portfolio. Only what you transfer to your futures portfolio will be able to hedge your position.
The next step is to choose a futures portfolio. The stock exchange offers 2 types of contracts: u s d - m futures and coin - m futures. The former is used for trading secured by the so-called stablecoin - USDT. The second is for trading secured with other cryptocurrencies. So if we have USDT in our wallet, we can transfer some of them to the USD-m futures wallet, and if we have, for example, Bitcoin in our wallet, we can transfer it to the coin-m futures wallet.
Above is an example in which we transfer Bitcoin to a wallet used for trading secured with cryptocurrency.
The arrow on the right allows you to select a cryptocurrency other than Bitcoin. The cryptocurrency you want to transfer will only appear if Binance provides it for this type of trading.
We go to the wallet marked FUTURES and as you can see in the above screenshot, select the option that interests us. The one to which we transferred our funds, i.e. a wallet with a cryptocurrency security or a wallet with a USDT security. Now we know that our resources are in the right place. Click (in the case of the mobile application at the bottom, in the case of the PC application on the left side, and in the case of the website, the Internet at the top of the menu) the FUTURES button and we see the order book with scrolling offers to buy and sell on the right and a form for opening positions on the right.
Above, we can see the open BUY tab, which is used to open a long / LONG position, which we open when we think that, for example, the Bitcoin price will be increasing, above the limit text, we can go to the SELL / SHORT tab, which is used to open a short position, i.e. play on declines when we believe that the price of the selected cryptocurrency will decline.
If we want to open our position immediately at the market price, we set the market instead of the limit and our position will open at the price from the market - to be used, as for me, only in the case of a large pump or a great waterfall downhill to be able to jump into the departing train. Personally, as a rule, I use limit orders. The price, just like in the spot, can be selected from the orders on the right instead of entering it by hand. In the anmount field, enter the size of our position. We provide it in BTC or USDT.
As you can see above, Post Only is selected. It is not necessary, but it allows you to save on commission, because it will be lower when we are the creator of the offer than when we use an already issued order (here is a small note - if you click on orders from the order book and you have the post only option selected, the order will not always enter - it will only enter when the order you clicked on has already passed and yours may become newly created). I don't know if this explanation is clear to everyone. You can adopt a rule that when I do it calmly, I use post only, and when I'm in a hurry I overpay and uncheck this box.
Below we can see the settings of the lever, which is probably the most interesting mechanism of the whole game, which allows you to place a position with a value higher than your funds. This is a great option because we earn in%, so the chance of earning is many times higher, unfortunately also a loss;)On the screenshots below, choose the Margin mode (isolated / cross) and the size of the lever you want to use.
Margin Mode allows us to choose between two types of Isolated levers - I recommend this one for every beginner. It is a lever that works as follows. You open a long position with the size of 0.01 BTC and the hedging of this position is intended for the amount calculated by the machine, e.g. 0.002 BTC - these are funds that you will lose when the price goes in the opposite direction than your position. In the case of a LONG position, in the description of your position it is determined in advance what the liquidation price will be - liquidation means the loss of the above-mentioned 0.002 BTC in full. Example: I open a LONG position when the Bitcoin price is $ 47,800 - the liquidation price will be 47,200. How much lower the liquidation price will be depends on the size of the collateral and the leverage we will use. In the case of the isolated variant, in the description of the Margin position, you will find a plus with which you can add, for example, another 0.002 BTC. This will, for example, lower the liquidation price to 45,200 so that we can sleep .... let's say calmer. However, when the price drops to $ 45,200, you will lose all 0.004 BTC! so the risk is the pleasure :)
Using the Margin mode of the cross type, we secure our position with the entire amount that is on the FUTURES portfolio. :)
So we have an open position. If everything goes according to plan, you can close it and make a profit in several ways, but more on that below. The first thing I do to minimize possible losses is to set the SL or stop limit order. How to do it ? In our well-thought-out strategy, we define what loss we are able to accept and set our SL at this level. Following the example above, we opened a LONGA at $ 47,800 with a liquidation price of 47,200, we'll set the SL to, for example, $ 47,555.
Once we know what loss we accept, let's think about the profit we will be interested in to close the position for profit. To do this, use the SL option to set another order again, in which we specify the price, for example 48,400 USD. Going to the open orders tab, we will see two orders: the first SL and the second TP, i.e. take profit. These orders will of course be triggered when the price reaches the exit price set by us with a profit or when the price reaches the exit price we set with a loss acceptable to us.
Since I would probably describe the whole procedure for too long, below I present a short video in which I present the entire procedure for opening positions, setting SL and TP orders and closing positions. Pay attention to the video on the setting of the leverage and how many contracts I can set on the lower lever and how many on the larger lever.
My favorite option is to set up a trailing SL order which requires tracking the course and taking action. Anyway, I think this is the favorite version of many traders. Why? Because using this method is only possible when everything is goinge according to plan. I go LONG and the price goes up, or I go short and the price goes down. How do we do it?
Let us return to our example from the earlier part of the text. I open a LONG position when the Bitcoin price is $ 47,800 - the liquidation price is $ 47,200. I set up SL and TP. However, after 10 minutes, it looks like it's going so well it's hard to believe and the price has soared to $ 48,200. We have some profit, but we do not close the position even if it is satisfactory! We delete our previously set SL and TP orders. We set a new order, this time only SL, but for example at the level of USD 48097.22. From that moment when our SL order works, we are earned anyway :) So we can go to sleep. If we continue to observe the quotations because we just have a moment of inspiration or we like it as the value of our portfolio increases, then we are going on. The price reaches higher levels, we give the higher SL. So another 10 minutes pass and the Bitcoin price is $ 48,500. Well, we are giving SL at e.g. USD 48,400. and so to the moon itself, which I wish at the end to everyone.
P.S. For the record, I would like to add that the contracts on Binance can be fixed or indefinite. The first ones are available weekly, quarterly, etc., and the permanent ones, i.e. Perpetual, are valid indefinitely. The first, therefore, will be realized after the indicated date at the price, which will then be (unless we close the position sooner or is liquidated) and indefinite ... as the name suggests. They end when a position is closed or simply liquidated.
The expected profits and losses can be counted on the calculator (I encourage you to find it on the Binance futures page;)) It also allows you to calculate, for example, what the liquidation price will be, assuming what position we will take and what the deposit will be as security.
And that would be it when it comes to the basics.
