Start shorting nubz so we can move b to p

Main TakeawaysFutures contracts allow traders to gain exposure to cryptocurrencies without the need to possess the underlying asset.Traders can sell high and buy low to profit from the price difference, which is known as short selling. This mechanism allows traders to profit from downward price movements.Leverage draws traders to the futures market, making it extremely capital-efficient, but also amplifying potential losses. Disclaimer: Digital asset prices can be volatile. Do your own research. See full terms here and our risk warning here and below. Binance Futures products are restricted in certain countries and to certain users. This communication is not intended for users/countries to which restrictions apply.Derivative contracts have been part of the financial landscape for nearly a century, but it wasn’t until recently that trading platforms began incorporating cryptocurrencies into their offerings. Today, digital assets are a significant part of many investors' portfolios as their characteristic volatility has made them a compelling choice for futures trading.Futures have quickly become one of the most traded crypto derivatives. However, they’re often mistaken for options. While both are powerful financial tools, futures and options serve different purposes and offer unique benefits. In this blog, we'll dive deeper into the world of crypto futures and explore what sets them apart.What Are Crypto Futures?With crypto futures, you can tap into the world of digital assets like bitcoin or ether without ever holding a single coin. Similar to stock indices or commodity derivatives, USDT-margined futures let traders speculate on an asset’s future value – allowing you to take risks and reap rewards based purely on market movements, not ownership.Unlike options, which give holders the right to choose between cash settlement or owning the asset, futures are settled in cash at expiration. The dominant aspect of crypto futures trading is that it can help investors diversify their risk exposure in adverse market conditions. Traders can sell high and buy low to profit from the price difference. This is known as short selling. Essentially, crypto futures contracts give market participants the opportunity to make profits regardless of the price direction of the underlying asset.Furthermore, crypto futures contracts are tradable 24/7 on derivative trading platforms like Binance Futures. Due to the risks associated with derivatives trading, traders must manage risks prudently, and it’s imperative to learn the basics of crypto futures before investing.How Does Crypto Futures Trading Work?While digital assets may face challenges like high volatility and periods of price decline, some traders use these features of the crypto market to their advantage. In crypto futures trading, the most important thing to understand is that you’re only speculating on price movements without needing to hold the actual cryptocurrency.Let’s consider a simple example.John entered a long futures position when BTC was trading at $40,000, while Sarah entered a short position at the same time. Then, prices moved up, and John and Sarah decided to settle their positions at $45,000. In this case, Sarah, who is holding a losing trade, will have to pay the exchange the deficit loss of $5,000 ($45,000-$40,000 = $5,000). John, on the other hand, will receive a profit of $5,000 from the exchange.Crypto Futures Trading Terms You Should KnowUsers should familiarize themselves with the essential concepts that are involved in crypto derivatives trading to have a better understanding of the benefits these financial products have to offer. Here are a few terms that can get you closer to becoming a successful crypto derivatives trader.1. LeverageThe lure of leverage draws traders to the futures market, making it capital-efficient. For example, to buy 1 BTC on the spot market, you'd need thousands of dollars. But with a futures contract, you can open a long BTC position at a fraction of the cost, thanks to leverage. However, while leverage amplifies potential gains, it also increases the risk of significant losses, especially if the market moves against your position.In contrast, leverage is not available in spot trading, so if you only have 100 USDT in your spot wallet, you can only afford 100 USDT worth of BTC.2. Margin RequirementsAn initial margin is needed to enter into a futures position. It is the percentage of a futures position’s notional value that must be covered by collateral (e.g. a stablecoin) when using a futures trading account. On the other hand, maintenance margin refers to the minimum amount that investors need to keep trading position(s) open. Maintenance margin checks are continuous and help in margin utilization calculation. When a trader's maintenance margin limit is hit, the open position gets liquidated.3. Funding RatesCrypto perpetual contracts don't settle like traditional futures contracts. Therefore, exchanges require a system that ensures that the index prices and futures prices converge regularly, which is called the funding rate. Funding rates are calculated based on the price difference between spot and futures markets. Investors will pay or receive funding payments relative to the open market positions, which can have adverse effects.For instance, funding rates may surge in an overheated bull market, making it costly for traders to hold long positions.Advantages and Risks of Trading Crypto FuturesFutures trading comes with its fair share of advantages and disadvantages. Here are the pros and cons of trading these crypto derivatives.AdvantagesCrypto futures trading allows you to bet against the market. You can go long or short to profit from either direction of the market. With the use of leverage, traders can gain significant exposure to an asset with only a fraction of its total cost. Many traders use futures trading as a hedge against spot markets, which is useful for any investment portfolio.RisksThe high volatility in the cryptocurrency markets can be a blessing or a torment to traders because the direction of an asset is not guaranteed.The exposure to leverage can lead to significant losses, especially for novice traders who do not implement a solid risk management strategy.How to Trade Futures Contracts on Binance?Trading crypto derivatives contracts on Binance Futures is quite straightforward once you have done your research. If you are an existing user, you can get started by following these steps: Open a futures trading account on Binance Futures. Please note that you must enable 2FA verification to fund your futures account before you start trading.Deposit funds to your Futures wallet, such as USDT or any other cryptocurrencies supported by Binance Futures. Select between the two derivative contracts available on Binance Futures: USDⓈ-M Futures and COIN-M Futures. Select the appropriate amount of leverage for your position.Place buy-limit, buy-market, or any other type of orders available on Binance Futures. Final ThoughtsCrypto derivatives trading offers a convenient way to speculate on the future value of digital assets. For those with the right knowledge and a solid risk management strategy, it can also be a rewarding venture. Binance Futures provides tight bid/offer spreads, a wide range of trading pairs, and large trading volumes, making it a popular choice for millions of active traders. For those just starting out, Binance Futures offers a dedicated mock trading environment to help users build your skills. With the option to practice in real-time without risking any capital, it’s a great way to explore how crypto derivatives work in a practical setting. If you're curious about crypto derivatives trading, you might find Binance Futures to be a useful platform for learning at your own pace. Further ReadingThe Ultimate Guide to Trading on Binance FuturesHow to Manage Risk and Trade Crypto Futures ResponsiblySix Strategies to Minimize Liquidation Risks in Crypto FuturesDisclaimers:No Representation This content is presented to you on an "as is" basis for general information and educational purposes only, without representation or warranty of any kind. It is not intended or should not be construed as financial or investment advice, nor is it to recommend or intend to recommend the purchase or sale of any specific product(s) or service(s).Hypothetical Performance ResultsDigital asset prices can be volatile. The value of your investment may go down or up and you may not get back the amount invested. You are solely responsible for your investment decisions and Binance is not liable for any losses you may incur. Futures trading, in particular, is subject to high market risk and price volatility. You may be called upon at short notice to make additional margin deposits or interest payments. If the required margin deposits or interest payments are not made within the prescribed time, your collateral may be liquidated. Moreover, you will remain liable for any resulting deficit in your account and interest charged on your account. All of your margin balance may be liquidated in the event of adverse price movement. Past performance is not a reliable predictor of future performance. Before trading, you should make an independent assessment of the appropriateness of the transaction in light of your own objectives and circumstances, including the risks and potential benefits. Consult your own advisers, where appropriate. This information should not be construed as financial or investment advice. To learn more about how to protect yourself, visit our Responsible Trading page. For more information, see our Terms of Use and Risk Warning.Responsibilities You are solely responsible for your investment decisions, and Binance is not liable for any losses or damages you may incur. The risk warning described herein is not exhaustive, therefore you should carefully consider your investment experience, financial situation, investment objective, risk tolerance level and consult your independent financial adviser as to the suitability of your situation prior making any investment. For more information, see our Terms of Use and Risk Warning and Responsible Trading Page.The products and services referred to herein may be restricted in certain jurisdictions or regions or to certain users in accordance with applicable legal and regulatory requirements. You are solely responsible for informing yourself about and observing any restrictions and/or requirements imposed with respect to the access to and use of any products and services offered by or available through Binance in each country or region from which they are accessed by you or on your behalf. Binance reserves the right to change, modify or impose additional restrictions with respect to the access to and use of any products and/or services offered from time to time in its sole discretion at any time without notification.