Learning Binance trading: (part 3)
B. Futures (Derivatives) Trading
Definition: Trading contracts that derive value from an underlying asset (e.g., BTC/USDT) **without owning the crypto.
-Types:
- Perpetual Contracts: No expiry date (most common in crypto).
-Quarterly/Dated Futures: Expire at a set date.
-Leverage: Borrowed funds to increase position size (e.g., 10x leverage = 10x profit or loss).
-Pros:
- Higher profit potential (due to leverage).
- Ability to short (profit from price drops).
-Cons:
- Higher risk (liquidation possible if market moves against you).
- Complex for beginners.
2. Key Order Types in Trading:
To execute trades effectively, you must understand different order types:
A. Market Order:
-Definition: Instantly buys/sells at the "best available price".
-Use Case: When you want immediate execution (e.g., fast-moving market).
-Risk: Slippage (price may change before execution).
B. Limit Order:
-Definition: Sets a "specific price" to buy/sell.
-Example: Placing a buy limit order for "BNB at $290" (only executes if price hits $290).
-Use Case: Better control over entry/exit prices.
C. Stop-Loss (SL) Order:
-Definition: Automatically sells if price hits a "predetermined loss level".
-Example: Buying BNB at $300, setting SL at $280 → Sells if price drops to $280.
-Use Case: Risk management (prevents large losses).
D. Take-Profit (TP) Order:
-Definition: Automatically sells at a "target profit price".
-Example: Buying BNB at $300, setting TP at $350 → Sells when price reaches $350.
- Use Case: Locking in profits without manual selling.
E. Stop-Limit Order (Advanced):
- Combines Stop-Loss + Limit Order.
-Example:
- Stop Price: $280 (triggers the order).
- Limit Price: $275 (executes only if price is ≥$275).
Do share ur views and opinions so we can grow togather. :)
