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What are Binance Futures?🤔
Binance Futures is a platform where you can trade contracts based on the price of cryptocurrencies like BTC, ETH, SOL, etc.
You trade a contract that replicates its price, allowing you to go long (up) or short (down).
The two main types are:
1. USDT-M Futures
Contracts that are settled in USDT, the most commonly used.
2. COIN-M Futures
Contracts that are settled with the cryptocurrency (BTC, ETH, etc.).
Less common, more used by advanced traders.
Advantages of trading on Futures
• You can profit even if the market falls
• Allows for leverage
• Perfect for hedging strategies
• High liquidity and fast execution
Concepts:
✔️ 1. Margin:
It is the capital you put up to open a position
✔️ 2. Leverage:
Multiplies the exposure of your trade
✔️ 3. Liquidation Price
If the price hits that level, Binance automatically closes your position
✔️ 4. PnL (Profit/Loss)
Varies according to price movement and the size of your trade
✔️ 5. Funding Rate
A fee paid every 8 hours between long and short traders
📌 Simple example of a trade
Suppose:
• You want to trade ETH at 3,000 USDT
• You go Long with 100 USDT
• Leverage x5 → position of 500 USDT
If ETH rises 2%:
Profit = 2% × 500 = 10 USDT
(10% on your initial capital)
If ETH falls 2%:
Loss = 2% × 500 = 10 USDT
And if it falls too much, you could be liquidated.
⚠️ Risks of trading on Futures
❌ 1. Extremely high liquidation risk
Do not use high leverage
❌ 2. Overtrading due to emotion
Trade with a plan, not on impulse
❌ 3. Not using stop-loss
Always set it
The SL keeps you alive for the next trade
❌ 4. Not understanding position size
Only use 1%–5% of your capital per trade
#Newcomer $SOL 🥖