How Can I Earn a Profit on Binance Futures Trading?
Everyone seems to have cryptocurrencies today. Isn’t it? A new generation of online marketplaces and mobile apps are making it easier for anyone to invest in these digital assets. Spurred on by the incredible growth of Bitcoin and other cryptocurrencies, the crypto world is expanding very fast. The volatility of the market makes it an attractive investment option for those who believe in the future of digital currencies. Investing in cryptocurrencies represents a way to earn high returns while supporting the future of new technology.
Investing in crypto assets is risky as well as profitable at the same time. But to get in action, you will need a crypto exchange where you can buy or sell crypto assets like Bitcoin, Dogecoin, Ethereum, and more. The growing adoption of cryptocurrencies and new technologies like NFTs have led to a plethora of crypto exchanges springing up to meet the growing demand.
Binance
Crypto exchanges are platforms that allow traders to buy, sell, and trade different cryptocurrencies. By far the biggest crypto exchange in the world at present is Binance. If you have ever traded cryptocurrencies, then you might know about the Binance exchange. It is one of the largest trading platforms offering a great experience to traders. It’s a leading cryptocurrency exchange by volume that has amazing features which are perfect for beginners. Additionally, traders can trade through crypto trading terminals like TrailingCrypto, supporting Binance and Binance Futures. They trade on behalf of the traders, making trading easier and profitable.
Recently, Binance has launched a futures trading platform called Binance Futures that allows users to trade with leverage, and to open both short and long positions. Before understanding Binance futures, let’s know about futures trading.
What is crypto futures trading?
Futures trading allows investors to gain exposure to digital currencies without owing actual cryptocurrency. It’s a similar concept to futures contracts, wherein the trader takes a risk on an asset’s future value. The key benefit of crypto futures trading is that it protects you against adverse price changes and extreme volatility in the cryptocurrency market.
Whenever a crypto futures contract expires, the trader is supposed to use the cash, instead of physically dealing in crypto assets. Crypto futures are tradable on the derivative exchange platforms like Binance Futures. Just like spot trading, Binance Futures trading allows traders to trade 24 hours a day, and seven days a week.
Due to the high volatility associated with the futures trading, one must manage the risks prudently, and it’s important to know the basics of the crypto futures before investing.
The most vital thing to note in futures trading is that you only take the risks of price changes in the cryptocurrency without holding the actual crypto asset.
Let’s understand it with an example:
Say Mr. X and Mr. Y entered a Bitcoin futures position at $50,000 each. In this scenario, Mr. X has a long position while Mr. Y took on an opposing trade i.e. short a position. Upon expiration, the Bitcoin futures price settled at $55,000 for each contract.
In this case, Mr. Y, who is holding a losing position, will have to pay the exchange the deficit loss ($55,000-$50,000 = $5,000).
But Mr. X, on the other hand, will receive a profit of $5,000 from the exchange.
This way, crypto futures trading works. Now, let’s move to Binance Futures trading:
Binance Futures Trading
In futures trading, the traders can participate in the market movements and may earn profits by going long or short on the futures contract.
By going long means you buy a futures contract with the expectation that it will rise in the coming future. Conversely, going short a cryptocurrency means betting on prices to decline in the future. To start trading on Binance Futures, the trader has to follow the below steps:
1. Deposit USDT, BUSD into the USD-M futures account as margin and other coins in COIN-M futures as margin.
2. Select the leverage level as per your preference
3. Choose the order type like buy/sell
4. Define the number of futures contracts you wish to own.
In spot trading, users only take profit when the value of the asset increases. But on the other side, futures contracts allow traders to earn profits in both ways as the value rises or falls.
Let’s understand long and short with example:
Going long on BTCUSDT
Here you entered a long position at $3000 and upon expiration; the value is settled at $3800. Here you have received a profit of ($3800 — $3000) = $800
Going short on BTCUSDT
Here, you entered a short position at $3000 and upon expiration; the value is settled at $2200. Here you have received a profit of ($3000 — $2200) = $800
So, regardless of price movements, futures trading enable a trader to participate in cryptocurrency movement. Basically, in this type of trading, the traders can borrow and trade with more than what they have. And, this is called leveraging.
Leveraging in Binance Futures
Binance Futures trading allows traders to trade with leverage where he makes use of borrowed funds from Binance to increase his trading position beyond what he could obtain from his available cash balance alone.
Let’s go through to this with an example:
For instance, a trader deposits $3000, and decides on open a trade on futures with a leverage of 5x. So, his capital is now magnified as $15,000. If he earns a profit, it will be calculated from the capital base of $15,000. And, unfortunately, if there is a loss, it will also be calculated from $15,000. So, risks are involved everywhere.’
As compared to Spot Trading, if the trader buys $2000 worth of BTC at $48,480 and BTC price increases to $62,800. Here the trader will make a profit of $587.12.
If he long on futures trading with a leverage of 5x, he will earn a profit of $2935.60 on BTC. This is around 30% profit. But if Bitcoin had fallen by 30% to 33,936, then the trader will lose 30% of his $10,000 which is more than the trader’s actual capital meaning that he will be liquidated.
Different order types on Binance Futures
Binance Futures supports 7 types of orders:
· Limit order
· Stop-limit order
· Market order
· Stop-market order
· Trailing stop order
· Post only order
· Limit TP/SL order
The order confirmation is required every time when an order is submitted. Additionally, the traders can either select one-way mode or hedge mode for their contracts. Among all these order types using Trailing Stops is an efficient way to earn profits. It allows traders to place a pre-set order at a specific percentage away from the market price when the market fluctuates. It locks in profit by enabling a trade to remain open and continue to make profits as long as the prices of an asset are moving in the favorable direction. For a long trade, the traders can place a trailing stop sell Binance order above the trade entry. And, on the other side, one can place a Trailing Stop Buy for a short trade.
Limit order allows traders to place an order at a specific price. A buy limit order will be filled when the price matches or is lower than your limit price. And it will execute a sell limit order at the price higher than your limit price. Market orders are matched immediately at the best available price. Stop Limit Orders are the conditional orders over a set timeframe which are executed at a specified price after a given stop price have been reached. Similar to the stop limit order, the stop market order in Binance futures also uses a stop price to trigger the trade. When stop price is reached, it will execute a market order.
How to trade on Binance Futures?
To place trades on Binance Futures:
· Initially, the trader has to select a particular cryptocurrency from the drop-down box under the main Menu. This will occupy the place order section of the platform with their chosen crypto asset.
· Now, it’s time to select the trade order size and include the take profit or stop-sell level if required.
· Finally, the trader has to click the submit button, and the new trade will be visible in the open positions tab of your Binance Futures trading platform.
The traders can also use ‘Buy’ and ‘Sell’ buttons in the price chart panel for quicker access. The specific trading parameters can also be chosen from the pop-up window available on the platform which allows the traders to execute their trade.
Additionally, using a Binance trading bot is the better idea where the traders can trade with a predefined strategy to earn profits on their trade. Binance Futures specializes in the trading of leveraged perpetual futures account. Once registered, the investors or traders can take both long and short positions on all the supported cryptocurrencies at the Binance platform.
With the Binance trading bot, the traders can automate trading Bitcoin, BNB, Ethereum, and other cryptocurrencies. When it comes to trading on Binance Futures, a crypto trading bot can do all the hectic tasks for you. It automates trading and is useful for many different sorts of traders. Making use of third-party crypto trading platforms or terminals like TrailingCrypto is a better idea to trade futures for the novice traders.
TrailingCrypto is one of the best crypto trading terminals that have also launched the Binance Futures bot designed for Futures trading. This will provide the highest possibility to 10x your profits. These bots allow traders to earn profits as long as the prices of cryptos are swinging.
Binance Futures trading with TrailingCrypto
If you choose a third-party profit or a personalized strategy, automating your trades with TrailingCrypto platform’s Binance trading bots is a better idea. It allows you to earn profits while taking advantage of the leverage offered with Binance Futures. Using the higher capital and leveraging can maximize your returns.
The Futures trading with crypto trading bot on Binance lets the traders divide their funds into smaller parts and buy the asset at fixed intervals using the trailing orders.
With personalized trading, one may use technical indicators or any other tools like using different order types like Trailing stop sell, stop-limit order, etc., and automate trading of this strategy at this platform. To trade with leverage with your bot, you can connect your account directly at TrailingCrypto exchange platform to Binance Futures. Once an appropriate exchange is connected successfully, the bot will activate the leverage functions, and lets traders earn profits on their behalf.
Conclusion
TrailingCrypto is one of the best trading platforms for Binance futures by automating your strategy which allows you to trade smartly. Through this innovation, the traders are given the convenience to bring their trading journey to the next level. The exchange offers both cross and isolated margin trading, and you can go long or short, or can even hedge your positions depending on the market analysis.
With TrailingCrypto, you can easily manage your trades and keep track of your portfolios on Binance Futures and other crypto exchanges. Connect your Binance Futures account to TrailingCrypto for a smarter and easier crypto trading experience.
