How to trade futures on binance.
At the moment, Binance is positioned as one of the largest trading platforms on the cryptocurrency market.
Despite the fact that the exchange was launched only in 2017, it is now steadily gaining momentum, always ranking at the top of the ratings.
A futures is a derivative financial instrument for the purchase and sale of an asset (in our case, a cryptocurrency) on an exchange. In a futures contract, the parties agree only on the price and delivery date. The rest of the parameters are agreed upon in advance in the contract specification. The parties (the seller and the buyer) have obligations to the exchange until the futures are executed.
Below we will give you a guide to trading futures on Binance with as much detail as possible.
If you don’t have a Binance account at all, you can create an account on Binance Futures right away without any problems.
You will see a window where you should enter your following details:
email; think up a password; click on the button to agree to the terms of use;
After that the registration will be considered passed, and you will see about the following window.
Suppose you already have a Binance account, but no Binance Futures account. Then follow these instructions:
Go to the Binance website and go to your account. Now you need to find the "futures" tab, which is located in the header of the site under the "Derivatives" menu.
Then you click this button and get to the futures contracts trading page. By default it will be in English, but in the upper right corner you can immediately switch the platform to your language. Now you need to click on the "open now" button and you can create a special account to trade futures contracts. That’s the point where your Binance Futures account is created. Before proceeding to real trading, we recommend testing the platform first on a demo account – Binance Futures testnet.
ACCOUNT DEPOSIT.
But before that, you must transfer funds from your main account to the futures account, the transfer is instant.
How to transfer money from your main account to the futures?
1) Select (1) "Wallet" then click (2) "Overview"
3) Select (1) the wallet from which you want to transfer money and the wallet (2) to which you want to receive. Also select (3) the coin which you want to transfer and quantity (4). Click (5) "Confirm" and wait for transfer. It takes a few seconds.
TRADING PLATFORM.
Back to the trading platform The first panel of the trading platform provides the following options:
1. In this section of the screen you can select the coin you want to trade(1), watch the price statistics, look at the chart of the coin you selected(2), select and analyze the price movement in different timeframes(3).
On the platform, you can also use the original and built-in TradingView chart to perform a technical analysis of the price chart.
2. In this part of the screen on the left (1) is an order book with configurable depth and broadcasting of all ongoing futures trades.. And on the right (2) is the panel where you can open your futures trade directly.
3. Let’s break down the panel where you can make futures trades. At the top, you have the ability to select contract options: cross and binance futures isolated (1).
What are Cross and Isolated modes?
Cross Margin Mode: binance All cross positions under the same margin asset share the same asset cross margin balance. In the event of liquidation, your assets full margin balance along with any remaining open positions under the asset may be forfeited. Isolated Margin Mode: Manage your risk on individual positions by restricting the amount of margin allocated to each. If the margin ratio of a position reached 100%, the position will be liquidated. Margin can be added or removed to positions using this mode.
And the ability to choose a leverage (2). The leverage range is 1x to 125x. The default setting is 20x. If you select a leverage greater than 20x, a warning pops up: "Large leverage, please be careful." This serves as a reminder to the trader – the greater the leverage, the greater the risk.
4. A little bit below you can select the type of order you want to execute. Binance Futures currently supports 7 types of orders:
Limit order Market order Stop-limit order Stop market order Trailing stop order Post only.
5. In the "Price"(1) section you specify the price at which you want to place an order to buy/sell a coin (read article about all types of orders here) . In the "Size"(2) section, the number of coins you want to use in the order. If you want to put a take profit and stop loss on the position at once, click TP/SL(3) (we strongly recommend doing it)
6. When using limit orders, you can use the Post-only and TIF (Time in Force) options. You will then pay the commission as a maker.
With TIF (Time in Force) you can specify a period of time that your orders will remain active before they execute or expire. The TIF can be:
GTC (Good Till Cancel): The order will remain active until it is filled or canceled. IOC (Immediate Or Cancel): The order will execute immediately (fully or partially). If it fills partially, binance the remainder of the order will be canceled. FOK (Fill Or Kill): An order must be filled completely after being placed or it will not execute at all.
There is also a "Reduce-only" option for any order type. This option will reduce the size of your open position.
At the bottom of the trading platform you can monitor your positions, view the history of trades and transactions.
The trading window at the bottom right is where you can open positions, place orders, or transfer funds from the main exchange wallet.
There is also a calculator there that you can use to calculate your PnL (profit-loss), target price and liquidation price.
Position liquidation.
Liquidation of positions is the forcible cancellation of all your open orders. It occurs when your margin balance falls below the required maintenance margin.
The margin balance is your account balance including PnL (profit and loss of open positions).
Maintenance margin is the minimum amount required to maintain open positions.
These indicators can be tracked in a special indicator on the open positions panel.
If your positions are one step away from being liquidated, it is advisable to close them manually, without waiting for binance futures automatic liquidation.
It’s also worth noting that there is an additional fee for automatic liquidation.
Auto-Deleveraging and binance Insurance Fund Auto-Deleveraging (ADL) is a system that liquidates user positions by priority. Auto-deleveraging occurs due to the inability to close your trade at the market price.
An insurance fund exists to prevent the closing of an ADL position. It is used to cover platform losses if the trader’s account balance becomes less than 0. However, the insurance fund may fail at times of high cryptocurrency volatility, which causes ADL – liquidation of open positions at the market price rather than the set price.
To prevent the liquidation of an ADL position, there is an indicator on the top panel of the platform. It shows the automatic liquidation queue (ADL). If all lights are on, the position is close to liquidation.
The priority on automatic removal is determined by the maximum amount of leverage and possible profit. It is highly not recommended to keep your positions until the automatic deletion.
At the moment, Binance is positioned as one of the largest trading platforms on the cryptocurrency market.
Despite the fact that the exchange was launched only in 2017, it is now steadily gaining momentum, always ranking at the top of the ratings.
A futures is a derivative financial instrument for the purchase and sale of an asset (in our case, a cryptocurrency) on an exchange. In a futures contract, the parties agree only on the price and delivery date. The rest of the parameters are agreed upon in advance in the contract specification. The parties (the seller and the buyer) have obligations to the exchange until the futures are executed.
Below we will give you a guide to trading futures on Binance with as much detail as possible.
If you don’t have a Binance account at all, you can create an account on Binance Futures right away without any problems.
You will see a window where you should enter your following details:
email; think up a password; click on the button to agree to the terms of use;
After that the registration will be considered passed, and you will see about the following window.
Suppose you already have a Binance account, but no Binance Futures account. Then follow these instructions:
Go to the Binance website and go to your account. Now you need to find the "futures" tab, which is located in the header of the site under the "Derivatives" menu.
Then you click this button and get to the futures contracts trading page. By default it will be in English, but in the upper right corner you can immediately switch the platform to your language. Now you need to click on the "open now" button and you can create a special account to trade futures contracts. That’s the point where your Binance Futures account is created. Before proceeding to real trading, we recommend testing the platform first on a demo account – Binance Futures testnet.
ACCOUNT DEPOSIT.
But before that, you must transfer funds from your main account to the futures account, the transfer is instant.
How to transfer money from your main account to the futures?
1) Select (1) "Wallet" then click (2) "Overview"
3) Select (1) the wallet from which you want to transfer money and the wallet (2) to which you want to receive. Also select (3) the coin which you want to transfer and quantity (4). Click (5) "Confirm" and wait for transfer. It takes a few seconds.
TRADING PLATFORM.
Back to the trading platform The first panel of the trading platform provides the following options:
1. In this section of the screen you can select the coin you want to trade(1), watch the price statistics, look at the chart of the coin you selected(2), select and analyze the price movement in different timeframes(3).
On the platform, you can also use the original and built-in TradingView chart to perform a technical analysis of the price chart.
2. In this part of the screen on the left (1) is an order book with configurable depth and broadcasting of all ongoing futures trades.. And on the right (2) is the panel where you can open your futures trade directly.
3. Let’s break down the panel where you can make futures trades. At the top, you have the ability to select contract options: cross and binance futures isolated (1).
What are Cross and Isolated modes?
Cross Margin Mode: binance All cross positions under the same margin asset share the same asset cross margin balance. In the event of liquidation, your assets full margin balance along with any remaining open positions under the asset may be forfeited. Isolated Margin Mode: Manage your risk on individual positions by restricting the amount of margin allocated to each. If the margin ratio of a position reached 100%, the position will be liquidated. Margin can be added or removed to positions using this mode.
And the ability to choose a leverage (2). The leverage range is 1x to 125x. The default setting is 20x. If you select a leverage greater than 20x, a warning pops up: "Large leverage, please be careful." This serves as a reminder to the trader – the greater the leverage, the greater the risk.
4. A little bit below you can select the type of order you want to execute. Binance Futures currently supports 7 types of orders:
Limit order Market order Stop-limit order Stop market order Trailing stop order Post only.
5. In the "Price"(1) section you specify the price at which you want to place an order to buy/sell a coin (read article about all types of orders here) . In the "Size"(2) section, the number of coins you want to use in the order. If you want to put a take profit and stop loss on the position at once, click TP/SL(3) (we strongly recommend doing it)
6. When using limit orders, you can use the Post-only and TIF (Time in Force) options. You will then pay the commission as a maker.
With TIF (Time in Force) you can specify a period of time that your orders will remain active before they execute or expire. The TIF can be:
GTC (Good Till Cancel): The order will remain active until it is filled or canceled. IOC (Immediate Or Cancel): The order will execute immediately (fully or partially). If it fills partially, binance the remainder of the order will be canceled. FOK (Fill Or Kill): An order must be filled completely after being placed or it will not execute at all.
There is also a "Reduce-only" option for any order type. This option will reduce the size of your open position.
At the bottom of the trading platform you can monitor your positions, view the history of trades and transactions.
The trading window at the bottom right is where you can open positions, place orders, or transfer funds from the main exchange wallet.
There is also a calculator there that you can use to calculate your PnL (profit-loss), target price and liquidation price.
Position liquidation.
Liquidation of positions is the forcible cancellation of all your open orders. It occurs when your margin balance falls below the required maintenance margin.
The margin balance is your account balance including PnL (profit and loss of open positions).
Maintenance margin is the minimum amount required to maintain open positions.
These indicators can be tracked in a special indicator on the open positions panel.
If your positions are one step away from being liquidated, it is advisable to close them manually, without waiting for binance futures automatic liquidation.
It’s also worth noting that there is an additional fee for automatic liquidation.
Auto-Deleveraging and binance Insurance Fund Auto-Deleveraging (ADL) is a system that liquidates user positions by priority. Auto-deleveraging occurs due to the inability to close your trade at the market price.
An insurance fund exists to prevent the closing of an ADL position. It is used to cover platform losses if the trader’s account balance becomes less than 0. However, the insurance fund may fail at times of high cryptocurrency volatility, which causes ADL – liquidation of open positions at the market price rather than the set price.
To prevent the liquidation of an ADL position, there is an indicator on the top panel of the platform. It shows the automatic liquidation queue (ADL). If all lights are on, the position is close to liquidation.
The priority on automatic removal is determined by the maximum amount of leverage and possible profit. It is highly not recommended to keep your positions until the automatic deletion.