We have to admit that Binance Futures platform is popping off just compare this real quick,
- ByBit at the 24-hour turnover of approximately 60,000 BTC
- BitMEX, which is still obviously the number one 205,000 BTC
- Binance already although this platform is quite new already 80,5650 Bitcoin turnover in the last 24 hours.
So in this article, I’m going to bring you the Binance Futures Trading platform a little bit closer. Now. Let’s start with the basics.
What does it mean to go short or long with leverage?
Quite simple to go Short means selling Bitcoin, to go Long means buying Bitcoin, with Leverage means that you’re only coming with certain collateral and you can trade more than you have, but if the price is not moving in the direction that you better on you can get liquid. It is so you can lose everything so compared to spot trading where you can never lose.
Everything except for Bitcoin would be going to zero and Futures Trading with leverage, you actually can. Now let’s have a look at a certain scenario.
Let’s say, for example, you believe that right. Now the price of Bitcoin is about to drop. So currently we are at approximately $8,000 but the price itself does not matter all too much. So here we have time and here we have the price.
So you think that at this point right now, Bitcoin is about to drop, so you enter a Short position.
So basically you are selling Bitcoin here. In this case where the 20x leverage we’re going to come to that later on. So let’s say, for example, you only have to bring 1,000 dollars, but you can bet on the price of Bitcoin the downfall of the price of Bitcoin at $20,000.
Okay, but if the price goes up well at some point there will be a liquidation price and if the price goes above that liquidation price, well you are getting liquidated and your whole collateral is gone. But obviously if the price of Bitcoin is going down as you expected, well, you’re making nice profits and you’re making more profits as if you would have just selling BTC for $1000, because you’re on 20x Leverage kind of makes sense, right.
The other way around it is the same. Let’s say, for example, you’re betting on the price of Bitcoin to go up. Once again, here we have time and here we have the price and the price is going sideways in here, but now you’re entering a long position here again with a 20x leverage. Here, in this case, the same there will be a liquidation price but this time obviously below the current price level because you are betting on the price to go up. So as long as the price goes up everything is alright, you’re making nice gains 20 times more gains as you would if you would be trading on spot to be exact actually but if the price goes down well at the liquidation price in here, you’re going to get Liquidated, that means all your money is gone. Your whole collateral is gone.
So that’s shorting and longing with leverage
But now let’s get a little bit more specific and start with
How to go Short or Long on Binance Futures?
We have to know how to open up a Binance Futures account because you actually have to enable this. So if you are in your Binance dashboard, all you have to do is you have to go over here and go for futures and then once again Futures checks Futures is another Futures exchange which Binance’s acquired.
You’ll go on Futures, below me there you can actually find the buttons to enable your futures exchange if you’re doing this for the first time also, if you’re not sure what exactly you’re doing or if you have a question, you can always go to the help function, you go to info your go-to guide in here, link opens up in a new tab and here obviously you can also read “How to open up a Futures account” and everything else like that and as you can see in the bottom in here where I just showed you on the exchange you can open up your futures account also in the same corner, you can actually find this little button in here which says transfer and that is how you can actually charge up your balance here on the Binance Futures exchange.
What’s very interesting if I hit transfer in here you can see that here.
We’re talking about US dollar tether that you have to add and not Bitcoin got to come to that later on but this has something to do with the contracts that are not inverse Perpetual swaps. Those are just Perpetual swaps to make that quick. They are not getting settled in BTC.
They’re getting settled in u.s. Dollar tether in this case. So it makes sense why I have to transfer US dollar tether to this exchange. I can already tell you this is the biggest difference between the contracts from BitMEX, Bybit. And in this case Binance, now what are the actual benefits our futures a lot of people out there are just using futures for gambling with super high leverage on Binance
You have a 20 x leverage if that is good or not that is up to you to decide for those people are trading on by bit and bit Max already, you know that well a 20x leverage seems quite risky if you ask me but that is just my personal opinion. I like to take a little bit higher risks, but the advantages are that you can trade more as you have so let’s say, for example, you have 10 BTC and you are long BTC because you hold them, but you want to hatch right?
You only have to invest some 0.5 BTC in this case with 20x leverage to hatch a short position against your long position Holdings, so you can bet on the price with less money. And as already said you can hedge your long position only with a fraction of your Bitcoin. Also, it’s very important to point out the risks, but you guys know how it is and as I explained to you already if you’re getting liquidated your money is gone make sure your trading responsibly make sure you’re not trading with your whole hot opposition, not your key, not your bitcoin, if your Bitcoin or your money, in general, is on an exchange. Well, that’s a third party. And remember why we are in Bitcoin. So do it as I do it and only trade with a fraction. That is what I recommend
Let me repeat the order types real quick and what you need we have limit orders, limit orders are only getting triggered. If a certain limit is getting hit then we have Market orders that are getting executed immediately to the current price.
Then we have stop limits to set your stop loss. For example.
What is the stop-loss?
Let me explain that quick. Well, let’s say for example, you know exactly that here is your liquidation price, but you want to get stopped out if the price is not moving in the direction you want to let’s say you were going long here, but you think that well if the price Falls below, well you want to get out of that position. So that would be your stop loss in here and that is exactly what you do with those stop-limit orders
And we have a take profit limit to take profits at certain trigger prices.
So nothing special but just good advice. If you’re not sure what you are doing then rethink what you’re doing and tested with lower amounts or on test nuts. It’s very important to understand those Market orders, but we have been discussing those for quite some time. Actually. It’s a little bit different on every exchange, but you will figure it out. That’s for sure
Now, let me talk a little bit about those contracts on Binance.
You are not Trading, actual Bitcoin, you are trading contracts now, what does that mean?
What are the main differences between those contracts here on by now? Futures compared to the inverse Perpetual swaps on Bybit and also on BitMEX
That means as Futures are at some point in the future they are getting settled but with Perpetual swaps, there is no specific date. You can always settle them yourself with marker clothes. For example, I do not recommend that you should be using limits to say fees and stuff. But you already know that procedure, right? So what the main difference is compared to BitMEX or Bybit here is, that those are also Perpetual swaps, but there are not in verse that means you’re not getting We paid in BTC but you also don’t have to pay BTC you’re paying your margin your collateral.
But you’re also getting your profit in u.s. Dollar tether. Okay. So those are regular Perpetual swaps settled in u.s. Dollar tether and not inverse Perpetual swaps as they are a BitMEX and Bybit for example where you’re getting paid and we also have to bring the collateral in BTC.
That is the biggest difference. Also what’s very important to point out is on BitMEX and also on Bybit you can change the leverages.
From 1 to 100 on buying and so far you have from 1x to 125x leverage available. Now before we going to jump into a live trade, I just want explain my position in here real quick here. We have the symbol BTC US dollar tether the size zero point one Bitcoin. My entry price was $8,500 the current market price at $8,100.
Others and here you can already see my liquidation price that we were talking about earlier on, this is a long position. So obviously on the way down at some point, I’m getting liquidated and my current PNL at the moment around $7 around 18%. What is PNL ? that is Unrealized profit and loss on this position calculate based on Mark Price and return on equity percentage.
So there are two factors which are important in here if I would Mark a close in here, I would close at approximately those 18%. Right now we’re just talking about 16% because Bitcoin is very volatile obviously, but here also the funding is included.
Okay, the funding means that every 8 hours. You can see that over here the payment rate exchange between the buyer and seller for the next funding. So that means if more people are short than the shorter’s are paying the long hours every 8 hours. But if there are longer the longer is paying the shorter’s that is to keep the balance. We have the same thing going on on Bybit and we have the same thing going on on BitMEX that is is just how those Futures contracts those Perpetual swaps are doing it. I mean the exchange has to keep a balance. That’s why funding exists.
So just to make that clear if you are betting against most of the Traders you get a lot of money for funding but yeah, I don’t know if that is a smart idea that’s up to you. So what I’m going to do right now is I’m pretty much just going to open up the same position. I’m not going to work with limit Binance here. I’m going to work with Market by so we can do the slice.
But once again if you are doing this or the more professional You’re trying to do this.
Well, the more you should go into limit orders. That’s for sure. You want to be a market maker and not a market taker you want to be one of those waiting in here to get filled instead of just filling right into the spread. We’re going to do the same thing.
We’re going to go long in here sear 0.1 BTC margin required. It says in here 42 u.s. Dollars if you think about the 20x leverage that makes sense, right? So we’re going to buy long in here and that is exactly what we’re doing. Our position is popping up in here. We do to the fee. We are starting with a negative PNL in here. . And what we’re doing right now as well immediately is we’re going to set a stop limit because this is very important. You can already see the Mark Price currently is 8100.
We entered at this price right now little bit higher actually and the liquidation process is at $7,654. So we want to make sure we have a stop loss above that and we can say for example, if you have a look at the chart and here real quick, this is just an example right now. Don’t take this analysis too serious, but we want to say Example, okay, if the price of Bitcoin goes below this week in here below 8100 we want to be stopped out want to close this position and then we want to have later on. I’ll look for a new position maybe so what we’re doing is we’re going to go to stop limiting here and then we’re going to go to stop price to the short side because we are long right now. And we want to short to get out right.
So we enter a stop pricing here of 8100 and now it is important to understand that your order is not going to get triggered. So you’re short. What you’re selling is not going to pop off if the price is not going below or to the level of $8,100 and the prices at what price level you then want to sell. So let’s say for example 8090 if this makes sense for you right now or not that is up to you to decide and the quantity would be 0.1 BTC, sell short sell short and then we can see right now here in open orders. We have a trigger condition of $8,100 before that before the price is going back down to $8,100.
Thing happens and then we have a limit price of 8,000 in $90 for exactly zero point one Bitcoin and that is our current position.
So that is pretty much all of it.