How To Use Binance Futures Trading For Shorting Or Longing?

Trading is an art and everyone starts their journey with spot trading. However, when you increase your skills as a trader, you understand that you can maximize your profits and minimize your risks with some innovative strategies.

While long-term trading requires you to trade spot markets, futures markets can be used to:

  • Short selling an asset, or
  • Use greater leverage in a trade.

So this article shows you: how to use Binance Futures contracts for the above objectives. Furthermore, the leverage allowed for these contracts is up to 20x on Binance (this limit was recently lowered from the previous maximum leverage of 100x).

So we will divide this guide into two parts, in which we first Short sell a futures contractt and in the second part we will Long term contract.

If you don’t already have a trading account with Binance, you will need one to use the Futures Trading feature. Get your free trading account with Binance here.

Once you sign up and complete your KYC on Binance, you can use the exchange’s Derivatives Trading feature.

So let’s dive in and explore the new world of Futures Trading on Binance.

Steps to Short Sell Bitcoin or Altcoins on Binance Futures Trading

If you like to learn by watching videos, here is a video guide for it:

In a typical trade, you buy first and sell later. But in Short Selling, the timeline of the trade is reversed, where you sell an asset first and then buy it later.

Short selling is done to make a profit in a downtrend trend market. This means that when you expect the price of an asset to fall in the near future, you sell it at a higher price first and then buy it at a lower price later.

For example, Ethereum (ETH) is trading at $2,000, and you expect it to drop to $1,500 within a week. So to make a profit from this possible downtrend, you would first sell ETH short @ $2,000 and then buy it back @ $1,500. This trade would earn you a profit of $500 per ETH.

The steps to short sell a Binance perpetual contract are as follows:

Step 1 – Choose Futures Contract

  1. Once you’re on Binance
  2. Click on “Derivatives”
  3. Click on “USD – M Futures” (or choose another derivative at your discretion)
Binance Futures Short - 1

Step 2 – Choose pair at your discretion – ETHUSDT

Step 3 – Transfer money to your Derivatives Wallet account

  1. Click the “Transfer” button
  2. Enter the amount to be transferred from your spot wallet
  3. Click on “Confirm”

Step 4 – Enter the order details

  1. Choose the type of margin (cross or isolated margin) – crotch margin
  2. Choose leverage level (up to 20x) – 1x
  3. Choose the type of order – Limit, Market, Stop-Limit – Limit
  4. Enter short sale price
  5. Enter Short Sell Quantity
  6. Click the “TP/SL” button
  7. Enter Take Profit and Short Sell Price
  8. Click the “Sell / Short” button

Your limit order will be placed and added to your active orders.

Step 5 – View your active order (extra step)

  1. Click the “View” button to understand how your order will be processed
  2. Phase 1 – You sell ETHUSDT @ $1826
  3. Phase 2 – Now there are two possible scenarios:
Scenario 1 Scenario 2
When the take profit price is triggered When the stop-loss price is triggered
ETHUSDT Buys Back @ $1,750, and Position Closes ETHUSDT Buys Back @ $1,900, and Position Closes

This is how to short a futures contract on Binance. Now let’s look at the process of craving these futures contracts on Binance.

Steps to Craving Bitcoin or Altcoins on Binance via Futures Trading

The desire steps are simply the reverse of the short-selling process. You buy an asset at a lower price first and then sell it at a higher price later. The price difference is your profit.

The steps to renew a Binance perpetual contract are as follows:

Step 1 – Choose Futures Contract

  1. Once you’re on Binance
  2. Click on “Derivatives”
  3. Click on “USD – M Futures” (or choose another derivative at your discretion)

Step 2 – Choose Link as you see fit – LINKUSDT

Step 3 – Transfer money to your Derivatives Wallet account

  1. Click the “Transfer” button
  2. Enter the amount to be transferred from your spot wallet
  3. Click on “Confirm”

Step 4 – Enter the order details

  1. Choose the type of margin (cross or isolated margin) – crotch margin
  2. Choose leverage level (up to 20x) – 1x
  3. Choose the type of order – Limit, Market, Stop-Limit – Limit
  4. Enter long price
  5. Enter long quantity
  6. Click the “TP/SL” button
  7. Enter Take Profit and Short Sell Price
  8. Click the “Buy / Long” button

Your limit order will be placed and added to your active orders.

Inference: Binance Futures Trading Tutorial

So, this is how you can use the Futures Trading feature on Binance.

Please note that this article is for educational purposes only. Using futures contracts and leverage is very risky and you should not use them without sufficient knowledge and experience. Furthermore, to minimize your risk, you should always use a Stop Loss trigger price.

I hope you have gained a basic understanding of futures trading. You will be able to explore many other strategies when you start using this feature.

Give your feedback in the comments section below and share it with your friends who want to understand these strategies.

See you soon with some exciting trading strategies.

Digant Chadha is CoinSutra’s research leader and a seasoned content writer with over two years of experience writing about blockchain and cryptocurrencies. Digant’s passion for Bitcoin and cryptocurrencies blossomed in late 2019, after which he quit his job and hasn’t looked back since. The technological and economic implications of Crypto are what interests him most, and he tries to explore new opportunities in this space every day.

He is a Chartered Accountant and Lawyer with over 10 years of experience in the FinTech industry. He likes to read, travel and take long rides on his bullet bike.

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