Tutorial on Binance currency-based contract

Currency-based contracts on Binance empower traders to speculate on the price of underlying assets without ownership, offering leverage for amplified profits and 24/7 trading flexibility.

Nov 14, 2024 at 04:28 pm

Tutorial on Binance Currency-Based Contract

Currency-based contracts, also known as perpetual swaps, are a type of derivative that allows traders to speculate on the price of an underlying asset without actually owning it. Currency-based contracts are typically traded on margin, which means that traders can use leverage to amplify their potential profits.

Binance is one of the world's leading cryptocurrency exchanges, and it offers a wide range of currency-based contracts. In this tutorial, we will provide a step-by-step guide on how to trade currency-based contracts on Binance.

Step 1: Open a Binance Account

If you do not already have a Binance account, you will need to open one before you can begin trading currency-based contracts. You can open an account by visiting the Binance website and clicking on the "Register" button.

Step 2: Fund Your Account

Once you have opened an account, you will need to fund it with cryptocurrency. You can do this by depositing cryptocurrency from another wallet or by purchasing cryptocurrency directly from Binance.

Step 3: Choose a Currency-Based Contract

Binance offers a wide range of currency-based contracts, including BTC/USDT, ETH/USDT, and BNB/USDT. You can choose the currency pair that you want to trade by clicking on the "Contracts" tab in the Binance navigation menu.

Step 4: Select Your Order Type

There are two main types of orders that you can use when trading currency-based contracts: limit orders and market orders. Limit orders allow you to specify the price at which you want to buy or sell a contract, while market orders allow you to buy or sell a contract at the current market price.

Step 5: Enter Your Order Amount

Once you have selected your order type, you will need to enter the amount of the contract that you want to buy or sell. You can enter the amount in either the base currency or the quote currency.

Step 6: Place Your Order

Once you have entered your order amount, you can click on the "Buy/Sell" button to place your order. Your order will be filled immediately if it is a market order, or it will be placed in the order book if it is a limit order.

Step 7: Monitor Your Order

Once you have placed your order, you can monitor its status in the "Open Orders" tab in the Binance navigation menu. You can also cancel your order at any time before it is filled.

Step 8: Close Your Position

When you are ready to close your position, you can do so by placing an opposite order to the one that you originally placed. For example, if you originally placed a buy order, you can close your position by placing a sell order.

Frequently Asked Questions

What is the difference between a currency-based contract and a futures contract?

Currency-based contracts are a type of perpetual swap, which means that they do not have an expiration date. Futures contracts, on the other hand, do have an expiration date. This means that currency-based contracts are more suitable for traders who want to speculate on the long-term price of an asset, while futures contracts are more suitable for traders who want to speculate on the short-term price of an asset.

What are the benefits of trading currency-based contracts?

There are a number of benefits to trading currency-based contracts, including:

• Leverage: Currency-based contracts allow traders to use leverage to amplify their potential profits.
• 24/7 trading: Currency-based contracts can be traded 24 hours a day, 7 days a week.
• Low fees: Binance offers some of the lowest fees in the industry for currency-based contracts.

What are the risks of trading currency-based contracts?

There are also a number of risks associated with trading currency-based contracts, including:

• Volatility: Currency-based contracts can be very volatile, which means that prices can move quickly and unpredictably.
• Margin calls: If the price of an asset moves against you, you may be required to post additional margin to keep your position open.
• Liquidation: If you are unable to post additional margin, your position may be liquidated at a loss.