What is futures trading?

Futures trading means you are buying or selling a contract (not the actual asset) based on your expectation of the future price direction, without needing to own the actual currency.

In other words, you are betting on the price going up or down.

Explanation of the components of futures trading as shown in the image below:

Trading pair: ETHUSDT

It means you are trading contracts on the price of Ethereum against the dollar (USDT).

Leverage (5x):

It means you are trading with a multiple of your capital. For example, if you have 100 dollars, your buying power becomes 500 dollars. (But the risk is higher).

Types of orders:

Limit Order: You specify the price at which you want to enter.

BBO: Best current bid or ask in the market.

Open Position button:

Long position (Buy): It means you expect the price to go up.

Short position (Sell): It means you expect the price to go down.

Price information:

You see the current buy and sell prices and contract quantities.

Countdown funding:

It shows you the next funding time (funding occurs periodically and is deducted or paid to you based on your position).

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Basic steps to open a position:

1. Choose the pair: like ETH/USDT.

2. Determine the type of order: Market (Immediate) or Limit (at a price you specify).

3. Choose leverage: Be careful as leverage increases both profit and loss.

4. Open a position:

Click on 'Long Position' if you expect the price to rise.

Click on 'Short Position' if you expect the price to drop.

5. Manage the trade: Set a stop loss or take profit order to protect your capital.

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Important advice:

> Futures are a risky tool for beginners.

Only invest what you can afford to lose, start with small amounts and learn well before taking big risks.

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Clarifying the difference between the most common types of trading orders (Limit - Market - Stop-Limit) in futures.

1. Market Order

Description:

The trade executes immediately at the best available market price.

When do you use it?

If you want to enter or exit quickly without waiting for a specific price.

The drawback:

You may not get the price you see on the screen, especially if liquidity is low or the market is moving quickly.

Example:

You see the current price of ETH now 1790.12 and want to buy immediately. You use a 'Market' order and it will execute immediately at the nearest available price.

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2. Limit Order

Description:

You set the price you want and wait for the trade to execute only when the market reaches that price.

When do you use it?

If you want to buy or sell at a certain price better than the current price.

Useful to avoid entering at a bad price.

The drawback:

The trade may not be executed if the price does not reach the desired level.

Example:

You want to buy ETH if it drops to 1785.00, so you place a limit buy order at that price, and the trade will not execute unless the price reaches it.

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3. Stop-Limit Order

Description:

This is a complex order typically used to set a stop loss or take profit.

It consists of:

Stop price: is the price at which the order becomes a limit order.

Limit price: is the price at which you want to execute the order after activating the stop.

When do you use it?

To stop loss in case of market reversal.

To lock in your profits after the coin rises.

The drawback:

If the market moves very quickly, the order may not be executed due to price divergence.

Example: You bought ETH at 1790 and want to stop loss if the price drops:

Stop price: 1780

Limit price: 1778

Once ETH reaches 1780, a limit sell order is triggered at 1778.

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