How to play Binance coin-based contracts

To open a coin-based contract position, traders need to select the underlying asset (e.g., BNB), choose a trading direction (long or short), set leverage, and specify the order type (market, limit, or stop-limit).

Feb 15, 2025 at 09:55 am

How to Play Binance Coin-Based Contracts

Key Points:

• Understanding coin-based contracts
• Opening a trading position
• Managing risk and profits
• Closing a trade

What are Coin-Based Contracts?

Coin-based contracts, also known as perpetual contracts, are futures contracts that track the price of a specific cryptocurrency, such as Binance Coin (BNB). Unlike traditional futures contracts, coin-based contracts do not have a fixed expiration date. They allow traders to speculate on the price movement of an underlying asset without owning it physically.

Benefits of Trading Coin-Based Contracts

• Higher leverage compared to spot trading
• Potential for high returns
• No expiration date, allowing for open-ended positions

Risks of Trading Coin-Based Contracts

• High volatility and potential for significant losses
• Margin trading magnifies both profits and losses
• Risk of liquidation if margin requirements are not met

How to Open a Coin-Based Contract Position

1. Create a Binance account and fund it with cryptocurrencies.
2. Choose "Derivatives" from the top menu and select "USDT-Margined" or "COIN-Margined" contracts.
3. Select "BNB" from the list of underlying assets.
4. Determine the trading direction (long/short) and set the desired leverage.
5. Choose the desired order type (market/limit/stop-limit) and enter the order quantity.
6. Review the order details and click "Buy/Sell."

How to Manage Risk and Profits

• Use stop-loss orders: Limit potential losses by placing stop-loss orders at predefined price levels.
• Employ take-profit orders: Secure profits by taking profits at target price levels.
• Monitor market conditions: Stay informed about news and market sentiment that may affect price movements.
• Control emotions: Avoid making impulsive trades and stick to your trading plan.

How to Close a Trade

1. Navigate to the "Positions" tab in the "Derivatives" section.
2. Select the BNB contract position you wish to close.
3. Enter the amount of the position you want to close.
4. Review the closing order details and click "Close Short" or "Close Long."

FAQs

Q: What is the minimum leverage for BNB coin-based contracts?
A: The minimum leverage is 1x, which means no leverage is used.

Q: How do I check the contract specifications for BNB coin-based contracts?
A: Navigate to the "Futures" page and select "BNB." Click on the "Contract Info" tab to view contract specifications, including trading hours and minimum contract size.

Q: What is the maximum position size for BNB coin-based contracts?
A: The maximum position size varies based on market conditions and available liquidity. Check the "Positions" tab for the current maximum position size.

Q: Can I trade BNB coin-based contracts with other cryptocurrencies?
A: No, BNB coin-based contracts are only tradable with BNB as the underlying asset.

Q: Is there a trading fee for BNB coin-based contracts?
A: Yes, Binance charges a maker/taker fee model for crypto contracts. Maker orders (which add liquidity to the market) receive maker rebates, while taker orders (which remove liquidity) pay taker fees.