Binance Futures Trading for Beginners 2022 (Full Step-by-Step Tutorial)
what's going on my name is simon and in this video i'll show you step by step how to trade futures on binance we're going to be covering everything you need to know so after watching this video you'll be ready to make your first trade in the futures market if you don't already have your binance account make sure to use the first link down below in the description to create your account by using that link you'll get a signup bonus of 600 in cash or cashback rewards so let's get started with the video all right first thing we're gonna do is log into our binance account once logged in we're gonna go to derivatives on the top menu and click on binance futures overview here we have some different options first we have the usdsm futures which stands for us dollar stablecoin margin futures as you can tell by the name these futures are settled in a us dollar stable coin specifically for binance that's either usdt us dollar tether or busd the binance us dollar then we have coin amp futures which stands for coin margin futures if we trade coin margin futures we're going to use coins like bitcoin or ethereum as margin for our trades we also have binance leverage tokens and binance options which we're not gonna cover in this video so let's click on trade now under the usdsm futures or coin amp futures that will take us into the trading interface in this video i'm not gonna go in depth on what everything means here on the screen as this is a futures trading tutorial i assume you've already done some trades in the spot market and you already know the basics if you are a complete beginner i recommend watching my beginner binance trading tutorial that you'll find down below in the video description in general the futures trading interface looks very similar to the spot trading interface we have the price chart in the center which we can actually switch from original view to trading view that way we get some technical analysis tools here on the left side then we also have the order book the most recent trades and the window where we can place our orders now before we can trade futures we'll need to transfer some funds into our futures wallet to do that we're gonna go down to the bottom right to the asset window now if you don't already have some funds on your binance account you can click on buy crypto to get some funds on your account in my case i already have some funds in my fiat and spot wallet so all i need to do is transfer over those funds into my futures wallet so i'm gonna click on transfer here we can choose where we want to transfer from i'm gonna choose my fiat and spot wallet and i'm going to transfer to my usd sm future wallet because i want to use us dollar stable coins to trade here as you can see i have some us dollar tether that i can transfer so i'm going to choose usdt here and i'm going to simply transfer over 100 usdt which is equivalent to 100 us dollars and now when i switch the assets window to show usdt i can see that i have 100 usdt that i can now use and trade with now we're ready to choose the futures contract that we want to trade over here we can find all the available future contracts but first let's quickly go over what a future actually is a future is basically a contract saying that we will buy or sell a specific asset at a set price at a specific time in the future so for example when we are trading a bitcoin future we're not really buying or selling bitcoin itself like we would do in the spot market but we are entering a contract saying that we will buy or sell bitcoin in the future so for example when we go long on a bitcoin future we expect the price of bitcoin to go up so we enter a contract saying that we'll buy bitcoin at a later date but at a price which is determined right now and which is usually close to the current bitcoin price so let's say we go long on a future contract for one bitcoin at a price of twenty five thousand dollars per bitcoin on the delivery date which is when the future contract expires we'll have to look at the bitcoin price to see if we actually made profit or if we've lost money if at the delivery date bitcoin is trading at thirty thousand dollars per bitcoin we've made a five thousand dollar profit because we have locked in the price of twenty five thousand dollars per bitcoin when we entered the futures contract on the opposite side if at the expiry date bitcoin is trading at only twenty thousand dollars per bitcoin we have lost five thousand dollars unlike in the spot market future contracts also allow us to profit when assets are going down in value so for example if we expect a bitcoin price to fall we will go short on a future so let's say the current bitcoin price is twenty five thousand dollars and we go short one bitcoin that means that we agree to sell one bitcoin at twenty five thousand dollars in the future if bitcoin actually falls to twenty thousand dollars until the delivery date of the future will make a five thousand dollar profit and if bitcoin rises to thirty thousand dollars we lose five thousand dollars so with futures trading we are basically speculating if the price of an asset will go up or down in practice we don't actually need to wait until the future contract expires to get out of our position if we want to close our long position all we need to do is open a short position for the exact same amount and that will cancel out the long position getting us out of the trade the profit or loss is then equivalent to the difference in price between when we open the long position and when we opened the short position and even though we might enter a future contract about buying or selling bitcoin or any other underlying asset in practice we don't actually need to buy or sell the asset itself instead we can just use any available asset as collateral also called margin to fund our trade and pay up when we close our position as we've already seen for usd sm futures that would be either us dollar tether or binance us dollar and for coin amp futures we can use these cryptocurrencies right here so as i have the stablecoin usdt in my futures wallet i need to make sure the usdsm futures are selected then i'm going to type in btc usdt the ticker for bitcoin and us dollar tether to see what bitcoin futures i can trade that are settled in us dollar tether here we can see that we have a perpetual future contract and a quarterly future contract the quarterly futures are the ones that have a delivery date or expiry date which is the date when our position would be automatically closed so for this one it would be september 30th the first two digits here are the month and the last two digits are the day of when this future will be settled the perpetual futures on the other hand don't have a delivery date meaning they will never expire and we can stay in our position until we manually close them and we don't have to worry about our future expiring so let's go ahead and choose the perpetual future contract for bitcoin now the next thing we need to talk about is our margin ratio which we can see down here but before we talk about the margin ratio let's look at what the word margin actually means margin is the amount of money we must have in our futures wallet to protect both the traders and finance from possible losses on trades so the margin acts as collateral on our future positions now the margin ratio is our indicator to see how close we are to get our future position liquidated if the margin ratio hits 100 percent liquidation will be triggered liquidation basically means that our margin balance is too low to fund our positions so the system will automatically close them and will lose our entire margin balance in the process so for example if we go long on bitcoin but the price of bitcoin keeps declining then the required margin to keep our position open might become higher than our available margin balance which at that point the margin ratio hits 100 percent and all of our positions are closed to make sure we can cover our losses with the margin balance we still have the goal is definitely to avoid liquidation and to make sure our margin balance is always high enough to fund our positions the margin balance ratio is calculated by taking the maintenance margin and dividing it by our margin balance the maintenance margin shows us the minimum amount of margin balance required to keep our positions open as we can see here we are currently in single asset mode which means that only our us dollar tether will be considered as our margin balance for our open positions in us dollar tether if we switch from single asset mode to multi-asset mode all of the other assets in our futures wallet like for example busd or bitcoin will also be counted towards our margin balance and by the way the p l the profit and loss of our open positions will also be considered as part of our margin balance which means that if we would hit 100 percent margin ratio and liquidation would be triggered all of our open positions would get closed at the same time and we'd lose our entire margin balance in single asset mode we'd only lose our usdt margin balance but in multi-asset mode we'd lose all assets in our futures wallet so for now i'm gonna stay in single asset mode there is actually a setting that we can use that allows us to have a separate margin balance for each of our positions so that if one position declines and triggers liquidation then we would only lose the margin balance for that one position we'd be able to keep our other positions open and we wouldn't lose the margin balance for those other positions so when we go up here and click on this button we can choose our margin mode currently we are in cross margin mode which means that our entire margin balance which right now is 100 us dollar tether will be used as collateral across all of our open positions when we switch from cross margin to isolated margin mode then like i've mentioned before we'll have a separate margin balance for each individual position so with each position in isolated margin mode we're only risking the margin that we allocated to this one position however in that case it usually takes less of a price move against us to get liquidated because the allocated margin is lower than in cross margin mode where all of the assets count as collateral whether we want to use cross margin mode or isolated margin mode really comes down to how we want to manage our risk so for now i'm going to stick with cross margin mode now let's look at leverage leverage trading is one of the main reasons why people want to trade futures in the first place using leverage simply means that we're able to exaggerate our profits but also our losses so we can click here to adjust the leverage of our trades it goes from 1x all the way up to 125x which is insanely high so for example let's say we choose a 10x leverage and the bitcoin future is currently at 25 000 per bitcoin with a 10x leverage we're able to buy approximately 10 times more than the amount we have in our futures wallet so if we now want to buy a future of one bitcoin it will only cost us two thousand five hundred dollars so one tenth of the actual price if you want to go totally crazy and choose a 100x leverage we would only need to pay 250 for a future of one bitcoin if then our bitcoin future goes up just one percent we have already doubled our 250 investment so you can see why using a high amount of leverage can seem quite attractive however on the other side if bitcoin goes down just 0.6 percent we'd get liquidated and lose our entire 250 dollar investment so at that point even if the future goes back up we are already liquidated which means we can't make any profits even when the price increases again so as you can see using high leverage can make us a lot of profit fast but will also wipe us out clean very very quickly especially in a highly volatile crypto market when we click on this icon here it will open up the binance futures calculator i like to use this calculator before i place a new order to see the most important metrics before i actually place the order with a specific amount of leverage i definitely want to look at the liquidation price for my trade if i would open this position and the future price reaches the liquidation price then the position would get liquidated great so now we've covered all the basics and we are ready for our first trade so again over here we can choose the future contract we want to trade i'm going to choose the btc usdt perpetual future contract then over here i'm going to stick with cross margin mode and select a 10x leverage down here we can see exactly how much in bitcoin futures we can buy with our current margin balance of 100 usdt and a 10x leverage we can also switch from btc to usdt here to see how much that is in us dollars as you can see it's almost 10 times our 100 usdt so almost 1000 usdt that we can now invest in this bitcoin future so then we're going to choose our order type for this example i'm going to use a market order which means that our order will be fulfilled immediately at the currently best available price then i'm going to make sure this is set to usdt so i can enter the exact dollar amount that i'd like to invest in this bitcoin future or we can also just use the slider here to select a percentage of our margin balance to invest so i'm going to invest 500 which is around 50 percent of my margin balance with a 10x leverage and then let's say i believe the bitcoin price will increase so i'm gonna click on buy slash long because this was a market order it was filled immediately and we can now see it in our open positions down here this position has a green bar which means that it is a long position here we also have the applied leverage which we can adjust at any time by coming back up here and changing the leverage then we have the current value of our position and our entry price we also see the so-called mark price which is a reference price that binance uses for liquidations we're not going to go further into how exactly the mark price is calculated because to be honest i don't understand it either but i'll leave a link to an explanation down below in the description next to the mark price we can see the liquidation price for our position this is a very important number we always want to keep an eye on because when the mark price reaches the liquidation price of our position liquidation will be triggered and we'll lose our entire margin balance then we have the margin ratio that we've already talked about and that we can also see right here then under margin we can see exactly how much of our margin balance is allocated to this position as we have set a 10x leverage the allocated margin is a tenth of the position size which we can see here and then we also have the profit and loss and the return on equity for this position which by default is calculated using the last price which is the price that this future has been traded at most recently if we want to get out of a trade and close our position there are a few ways how we can do that the quickest way is to simply click on market which will close our position immediately at the best available price or we can set our target price here and click on limit and that will put a limit sell order in the system which we can see here under open orders once the future price hits our limit price our position will be closed immediately of course we can also cancel any of our open orders by just clicking on the trash bin right here another way to close our long position would be to simply place a short position for the exact same amount so we can come over here and enter the size of our open long position but now we will go short so we click on cell short and that will then cancel out our long position if we don't want to close our entire position we could also just reduce it so let's say we want to reduce our open position by 50 percent what we're going to do is look at the current size of our position and cut that amount in half then when we click on market we put in a sell order for that amount and our long position will be reduced by 50 immediately if we want to sell at a specific price we can type in the price right here click on limit and they will put in a limit sell order for that amount by now you've probably also noticed the reduce only option right here whenever we activate reduce only the system will only allow us to reduce our current position so for example let's say we have an open long position for bitcoin now when reduce only is ticked the system will not allow us to increase our long position because as the name says it's reduce only we also cannot put in a cell order of a larger amount than our current long position because that would mean that our long position would not only be canceled out but it would also change into a short position which isn't allowed with reduce only activated so again like the name says whenever reduce only is ticked we can only make our position smaller or cancel it out altogether so it's basically just a safety feature to make sure we don't make any mistakes when wanting to reduce our position if we want to increase our position we'll have to do that up here so let's say we want to double our current long position what we're going to do is look at the current value of our position here and enter that amount here for the next order then we simply click on buy long and that will add this amount to our current long position let's do another example but now we're going to go short bitcoin so we believe that the bitcoin price is going to decrease again we're going to stick with cross margin and set the leverage to 10x we're going to use the slider to set the amount we want to sell short and then we're going to click on cell short in our open position we can now see a red bar which means that this is a short position we also see that the liquidation price is above the current bitcoin price which makes sense because we're going short and we want the bitcoin price to go down however when the price instead moves in the other direction we're losing money on this trade and if the price goes all the way up to the liquidation price we will get liquidated in order to manage our risk we can also set a take profit and or stop loss for each position all we have to do is click on this edit icon here and then here we can set our take profit price which means that when this price is reached the position will be automatically closed and lock in our profit here we can see the approximate profit we can expect with our target price for the stop loss we can do the same thing just set a target price where we want our position to be closed at to limit our losses when we click on confirm we can now see both the take profit and stop loss order in the open orders tab we can also already set our take profit and or stop loss before we open a position we would just have to take the tpsl function which stands for take profit and stop loss and then we just enter our take profit and stop loss before we go long or short on this future until now we've only been using market orders but of course we can also do limit orders as well we can just switch from market to limit and then set our entry price here we put in the order by going long or short and it will be visible right here in the open orders tab and it will stay here until the futures price reaches our entry price that we have just set which is when it will automatically open our position at that specific price there's also something called a stop limit order with a stop limit order we're able to set a price range for where we'd like to open our position so for example we can tell the system that we want to go long when the bitcoin future price goes up to twenty five thousand dollars and we are willing to buy in at any price between twenty five thousand dollars and twenty six thousand dollars using this type of order really makes sense whenever the market is very volatile because then we're basically giving the system a price range where it's allowed to open our position in if we just use a normal limit order the system is only allowed to trade at our specific entry price but with a stop limit order the system is allowed to take the best price within the price range that we have set there is also the stop market order in this case we're telling the system at what price the market order should be triggered so as soon as our stop price is reached our market order will be fulfilled at the currently best available price then we also have the trailing stop order this is a great tool we can use in a situation where our position is already profitable and we want to make sure to realize that profit but at the same time we think that there's more upside potential so a trailing stop order is an order type where the stop limit is moving with the price but only in one direction so for example let's say we are currently in a long position for bitcoin the bitcoin price is currently at twenty five thousand dollars and we are already one thousand dollars in profit because we entered at a price of twenty four thousand dollars then we decide to put in a trailing stop with a callback rate of two percent and we go short with the same amount of our current long position at the current price of twenty five thousand dollars per bitcoin our trading stop will be set at two percent below twenty five thousand which is twenty four thousand five hundred now if bitcoin falls to 24 500 and therefore reaches our stop limit the short order will be triggered which means that our long position will be closed in that case we've still made a profit of 500 with our trade now if bitcoin doesn't fall to the stop limit but instead keeps on going up to let's say twenty six thousand dollars our trailing stop limit is moving up with the price so now it's two percent below twenty six thousand dollars which is twenty five thousand dollars four hundred and eighty if the price keeps rising to twenty seven thousand dollars the trailing stop also moves to twenty six thousand dollars four hundred and sixty which is two percent below twenty seven thousand dollars but now if the price falls again the trailing stop doesn't move because it can only go in one direction so if the price now falls to twenty six thousand dollars four hundred and sixty the short order will be triggered and our long position will be closed with a profit of two thousand four hundred and sixty dollars so as you can see the trailing stop is a great tool to lock in profits and limit losses the activation price of a trading stop order is defining when the trading stop will be activated meaning that when the current future price moves past the activation price the trading stop will be set and is ready to move however we can also just leave the activation price empty and then the trailing stop will be active immediately if this video was helpful to you please make sure to go long on the like button down below because i can assure you it can only go up from here and make sure to use the link down below in the video description to get a 600 signup bonus when creating your binance account
2022-08-27 23:43
