Futures Contract and Perpetual Trading-Binance4 min read

Table of Contents

Are you willing to trade in the safest way and gain as much as profit that is possible, and do you have chosen Binance futures trading?

Before starting to make money from the Binance futures market it would be wise to at least know, what the future market is?

It’s an agreement to buy or sell some commodity on a given date for a given price. Futures are similar to margin trading.

Simply futures are contracts with an expiration date that closes in the future. So all you need to know about futures is that there is something called a contract and this contract has an expiration date. When these contracts expire people have bought or sold at certain prices and they expect the price to go up and down by the end of that contract date. When you trade futures you don’t need to wait for the contract date to come to pass, you can close before it. These future contracts expire in a certain ate and renew with a new ticker name. On future contracts, you can apply leverage meaning that you can apply ten times twenty-five times even a hundred times leverage to your position expecting it to go in the direction that you have planned. Just like margin trading with futures trading, you can go long and you can go short depending on what you believe the price is going to do next. Shorting is when you can sell at a high price and buy back what you’ve sold at a lower price than distance and price becomes a profit.

Binance is one of the exchanges that offer futures contracts services to its clients. You can add this feature to your Binance clone script or any other exchange clone script that you have decided to develop. You can ask your cryptocurrency exchange software development company to add this feature to your exchange software.

futures contract

Why buy something in the future when you can just simply buy it or sell it right now?

Risk management (hedging)

Highly leveraged investments

High liquidity

Low Commission and Transaction fee

Long trade VS short trade

Traders look to make money from the stock price decreasing, long trades are often called being bullish on the stock.

A long trade is simply just buying a stock and only requires you to have enough money to pay for the shares and broker commission.

On the other hand, short trades also known as short selling trades look to make money from the stock’s price decreasing. Short selling is a little more complicated than being long stock and it has a little more risk. Because of this, an account with special requirements and borrowing privileges called a margin account is required to be able to short-seller stock, this is because an investor technically borrows the shares from the stock brokerage immediately sells them, and attempts to buy back the same shares at a lower price with the intention on returning the borrowed shares and profiting the difference this sounds complex but it happens instantly behind the scenes when you choose to short sell a cryptocurrency a short-selling can be riskier than buying a digital currency and is not recommended for inexperienced investors. This is because since you make money when an asset price falls and lose money when the stock price rises potential gains are capped at 100% as a stock can go no lower than 0$, but potential losses are technically unlimited as a stock price has no upper limit.

perpetual trading

Perpetual future trading 

Perpetual future is a non-expiring contract.

  • It is known as perpetual contracts or perpetual swaps
  • It was proposed by Robert Shiller in 1992 to enable derivatives for liquid assets
  • They only exist in the crypto market
  • It was introduced to people in 2016 by Bitmex

Why do perpetual exist from the perspective of a trader or investor?

  • A futures contract can be used to get leveraged exposure to an asset, long or short
  • As a trader, you can make trades of a much higher value ( like trading 100 sol with only 10 sol)
  • Futures contracts can be used to “hedge” your position.
  • Perps allow an exchange to offer derivatives trading on liquid assets
  • They also don’t require the exchange to lend money, they can let traders use leverage and liquidate/pay them out accordingly.

Send Your Request

Don't miss these articles

Leave a Reply

Your email address will not be published.

Radin Experts
Online Support System

Please enter the form information