New Binance’s Instruments: Cryptocurrency Futures Contracts

By Coinmatics on The Capital

Coinmatics

Published in

The Capital

5 min readJan 6, 2020

The Binance trading platform has recently launched futures trading.

The service has proved to be in great demand. What is the essence of such deals? What does the exchange offer? How do you open an account for futures trading?

The exchange established in 2017 is now seen as the largest platform in the cryptocurrency market. Cryptocurrency futures contracts have recently been made available on Binance. The service promises to be popular, given that the trading results for the first 24 hours were $170 million.

The essence of futures trading

The actions prescribed by futures contracts are performed not in the moment when it is created, but rather in the future, hence the name of the contracts.

This is the main difference between the classic and futures trading. Initially, the operations aim at avoiding a potential price fall of an asset. Although, if the price goes up, the trader will miss out on the profit.

The features of futures trading

Unlike at the spot market, it is not a cryptocurrency itself, but rather a contract for buying it that is for purchase. However, these are purely speculative operations since there is neither shipment nor receiving the goods.
The price is not closed instantly. An open position is to be closed at a specified date.
A price of an asset at the spot market differs from the price for the same asset at the futures market since their profitability is different as well. Moreover, there are some storage costs. Binance applies financing rates to reduce the gap.
Despite all the differences between margin and futures trading, it is possible to trade in futures with margin support.

Conditions and opportunities

The platform supports BTC and ETH futures contracts, which are tickered as BTCUSDT and ETHUSDT, respectively. Almost at the New Year’s Eve, one more pair appeared — BCHUSDT.

The contracts may not have a date; such contracts are called perpetual futures contracts. The risks and management of the contracts are different from those of the original ones.

Both traditional futures and the futures with margin support can be traded. The support can reach a 125x leverage. Normally, the initial margin would be from 4 to 10 percent, but sometimes it may be up to 100%. It depends on the volatility of the assets in question.

Types of orders

On the Binance platform, there are three types of orders. They are as follows:

Limit orders. The type of orders is executed when the real price of the asset meets the price set in the contract.
Market orders. The request is executed instantly at the best market price. The key is to set the amount of the asset you want.
Stop-Limit orders. It operates with a predetermined stop price, limit price, and an amount during a particular time frame. Once the stop price is reached, the stop-limit order becomes a limit order and is executed.

The minimal order is $10.

Warning! To start trading, a user must using Binance Futures Service Agreement.

Commission fees

The fees charged for futures trading are often a bit lower than those of the spot market. All users enjoy a 50% fee reduction for the first three months of trading.

The spot market’s VIPs of any tier have the same level of privileges on the futures market. However, owing to the leverage, the volumes of spot trading is 5 times lower.

Registration

To work with futures contracts, a user must register on the exchange and open a futures account.

It requires making a few steps:

Click the Register or log in buttons on the top right side.
Insert the email address and password in the opened tab.
Confirm your age and agree on the terms of use.
Click the Register button.
Confirm that you’re not a robot (do a puzzle).
Wait for the confirmation email and click the link contained therein to confirm your registration.

Then, open an account:

Go to the Futures section.
Click Open Now button and open a special account for a futures trading.

Upon completing the steps, one can deposit on the account and start trading. It is possible to practice trading crypto on a demo account first.

Demo account and training

Beginning traders and those wanting to test new strategies can practice on a demo account.

There are a lot of useful articles on the website that explores the possibilities of the platform. For example, Binance Futures Trading Interface Guide is one such article. Generally, it is a complete guide to the system. Those wishing to understand the basics of blockchain and cryptocurrencies are welcome to Binance Academy.

Support

If a user has any question, the customer support service is available right on the website.

Conclusion

The overall feedbacks create a positive image of the exchange. The most important thing, according to the users, is a lack of withdrawal-connected issues. The profit is calculated in USDT, the most popular stablecoin, which is handy. A huge number of exchanges support the coin. The transaction of the assets to the main account takes no time.

The majority of the users like the interface and functionality of the trading web terminal.

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