Everyone has heard the name of coin futures trading, but they do not know the exact meaning or procedure at all. For investors who have started studying by analyzing the Binance futures market, today we will summarize practical tips.
In this article, we will explain in detail everything from the basic concept of futures trading to the actual operation method and cost-saving tips.
What is futures trading?
Futures trading is literally 'a contract to buy and sell an asset at a specific price at a future point in time.' Traditional futures apply to physical assets such as agricultural products, metals, and crude oil, but it is slightly different in the cryptocurrency field.
It is not actually about exchanging Bitcoin or Ethereum, but rather about exchanging only the difference according to the price fluctuation of the asset. As a result, it is a highly speculative investment method that predicts whether the market price will rise or fall.
For example, if the Bitcoin price is currently 90 million won and is expected to rise to 100 million won tomorrow, take a 'long position'. Conversely, if it is judged to fall, a 'short position' is taken.
This process is similar to betting on the outcome of a soccer game, but the investment scale and strategy management are much more complex.
The biggest feature of these futures transactions is 'leverage'. This is a system that lends funds so that investors can trade with a larger amount than the actual funds they own. For example, if you have 1 million won, you can trade on a scale of 10 million won by using 10x leverage.
Of course, profits can be 10 times higher, but losses can also be that much greater. That's why leverage is described as a double-edged sword. If you are new to futures trading, adjust the leverage to a low level of 3 to 5 times to get a feel for the market trend.
Preparation for Binance Futures Trading
To use the Binance exchange for the first time, some preparation is required. Since Binance is an overseas trading platform, you cannot directly deposit Korean won. After purchasing stablecoins such as USDT (Tether) on a domestic exchange, you must transfer them to your Binance wallet.
I mainly used Upbit, and the important point at this time is 'network selection'. This is because using the Tron (TRC20) network lowers the remittance fee and speeds up the transfer.
The deposit address must be accurately entered on the withdrawal screen of the domestic exchange by copying the wallet address generated by Binance. You must always check carefully as you cannot recover your assets if you enter the address incorrectly.
After the transfer is completed, you must transfer funds from the spot wallet to the futures wallet through the 'inter-wallet transfer' function within Binance to actually trade. You need to be careful because you may encounter an embarrassing situation if you miss this step.
How to do Binance Futures Trading
You can proceed with full-scale futures trading on the Binance app or PC web. If you select 'Futures' in the bottom menu, you will be taken to the trading screen.
After selecting the desired cryptocurrency, set the leverage ratio and position direction. Bitcoin is a suitable asset for beginners because its market capitalization is large and its volatility is relatively stable.
A buy position (Long) is a strategy taken when expecting a price increase, and a sell position (Short) is a strategy taken when expecting a price decrease.
The initial setting is set to 20x, but this is quite risky, so we recommend lowering it to 5x or less.
One of the important factors is the selection of 'margin mode'. Binance offers two types: 'Isolated' and 'Cross'.
Isolated mode sets a separate margin for each position, so losses are limited to that position only. On the other hand, in cross mode, the entire account balance acts as collateral, so if a loss occurs in one position, it can affect the entire asset.
If you are in an environment where you cannot continuously check the chart, it is difficult to respond in real time, so using isolated mode is a much safer choice.
There is also a difference in trading methods. A 'market price' order is suitable for urgent trades because it is executed immediately, but the commission is relatively high. On the other hand, a 'limit price' order is executed only when the price desired by the user is reached, so the execution speed is slow, but the commission reduction effect is great.
Based on Binance, the limit order fee is 0.02% and the market price is 0.05%.
Leverage + Fees
If you use leverage, the commission burden becomes even greater. For example, if you apply 10x leverage to 1 million won and trade 5 times a day, commissions of 20,000 to 30,000 won can be incurred in a single day.
On a monthly basis, more than 500,000 won can be spent, so it is wise to use limit orders whenever possible. From a long-term perspective, limit orders were advantageous in terms of cost efficiency.
PC vs Mobile for Futures Trading?
It is also necessary to consider the advantages and disadvantages of mobile and PC environments when trading futures.
Smartphone apps are easy to access on the go, making them great for checking trends or adjusting positions in a short amount of time. However, complex technical analysis or multiple chart settings are difficult.
In a PC environment, various auxiliary indicators and precise analysis are possible, so a more systematic trading strategy can be established.
Futures trading can be felt as a means of systematic asset management rather than simple speculation. The most important thing in futures trading is risk management and a strategic approach is essential.
Excessive leverage, indiscriminate position expansion, and lack of fee management are major causes that can lead to large losses. Conversely, it is sufficiently possible to manage profits stably through appropriate leverage operation, isolated mode selection, limit order utilization, and parallel mobile/PC operation.
The Binance futures market is clearly an attractive investment destination. However, it is important to clearly recognize that it is not a 'money-making machine' but a high-risk market that involves risks. An objective and cool-headed approach is needed.
More important than the accuracy of prediction is the attitude of preparing in advance, keeping in mind the possibility of loss at any time. This attitude can not only increase practical asset growth, but also positively affect financial literacy and financial strategy establishment.
If you have not yet signed up for Binance, we recommend signing up through the link below. You can easily receive a 20% fee discount just by signing up.
🔸Go to get 20% Binance fee discount + 600USD
Not only new members but also existing members can receive a 20% fee discount if they meet the following 5 conditions.
Already signed up for Binance.
The invitee has never accepted an invitation before.
The invitee's account has not traded on the Binance platform or used products in the past 180 days.
When a qualified inviter opens and logs in to the link, a confirmation window appears.
The binding takes effect when the inviter clicks [Bind Now].
In this way, we have learned about the Binance futures trading method and discount benefits that can save fees today. I hope it will be of great help to you, and if you are still hesitating, I recommend proceeding with futures trading while receiving fee discount benefits.