Binance Futures – leverage factor with high returns
Why are investors attracted to the Binance Futures market? How will leverage factor bring about capital efficiency? Are Binance Futures Trading For Beginners? Let’s find out through the article below.
What is the Binance Futures Market?
In the Futures market, you are trading contracts that represent the value of a particular cryptocurrency. When you buy a futures contract, it means, at the moment, you won’t own the underlying asset. Instead, what you own is a contract with an agreement to buy or sell a specific amount of cryptocurrency at a future date.
With futures contracts, you can take advantage of price fluctuations. Regardless of whether the price rises or falls, futures contracts allow you to participate in cryptocurrency movements with ease. In other words, with futures, you make predictions about the price of a cryptocurrency instead of actually buying an underlying asset.
If you expect the value of an asset to increase, you will buy a futures contract to go long (buy), and if you expect it to decrease, you will short (sell). The possibility of profit or loss will depend on the outcome of your prediction.
Features of Binance Futures Trading with Cryptocurrency
Traders are attracted to the futures market because of the leverage factor. Leverage makes futures trading extremely capital efficient. For example, to buy 1 BTC on the spot market, you will need thousands of USD – 50,000 USD based on popular market rates. With futures, you can open a BTC futures position at a fraction of the cost.
This is only possible using leverage. The higher the leverage, the less you need to spend on a position. In contrast, spot trading offers no leverage. Let’s say you only have 5,000 USDT available. In this case, you can only buy Bitcoin with 5,000 USDT.
Flexibility for Long or Short
When you buy Bitcoin on the spot market, you only make a profit if the price goes up. However, in a bear market, you will hardly make a profit. Binance Futures contracts allow you to profit from short-term price movements regardless of which direction the market goes up. Even if the price of Bitcoin drops, you can take advantage of the falling price move and trade with it.
Trade Futures with Cryptocurrencies on Binance
Binance offers a variety of futures contracts so that traders and investors can easily participate in the market.
Users can choose from two types of Binance futures products:
USDT and BUSD Margin Futures- Supports perpetual and forward contracts with leverage up to 125x
Coin Margin Futures- Supports perpetual and forward contracts with leverage up to 125x
These contracts offer flexibility and diversity, allowing users to trade futures contracts backed by a wide selection of marginable assets. These contracts also offer a strategic advantage in different market conditions, allowing users to maximize profits.
Binance Futures trading also has advantages for investment strategy and profit optimization. However, if you do not have the knowledge and techniques of risk management, it can cause you big losses. So before deciding to trade you need to have a careful consideration.
Spot trading is easy to understand and intuitive for most beginners. Therefore, it is the right place for new users to trade cryptocurrencies. However, futures trading offers a strategic advantage and allows you to maximize profits.
Futures trading can be lucrative if you have the right risk management knowledge and techniques to avoid huge losses. Therefore, you should strategize and do due diligence before trading futures contracts and understand both their advantages and risks.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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