Binance Futures Leverage Explained
After choosing the margin mode, you need to set your leverage. As you are going to short Bitcoin, you can use up to 125x leverage.
In this tutorial, Im using 5x leverage for my short position on Bitcoin. The higher the leverage, the higher the risk will be.
The logic behind leverage is pretty simple. Lets say you have 200 USDT and you are using 10x leverage, your position size will be 2000 USDT.
As the price changes, youll earn much more money as your position size is 2000 USDT instead of 200 USDT.
But, when the price does not go in the direction you desired, you will lose money and you cant lose more money than your margin .
So there is a price at which your position gets liquidated which is called liquidation price. If you use very high leverage, the liquidation price will be closer to your entry price.
Taking A Short By Going Long Elsewhere
Before the general public had access to options and derivatives trading, the only way to benefit from an anticipated price drop was to hold something else, usually cash, and buy your target asset cheaper later on. At the moment going long elsewhere is still a useful approach to crypto trading as volatility is high and there is less need for leverage.
It works like this. If your intention is to stack Sats, you might look at ETH and decide that its historically weak against BTC. You would buy ETH with your BTC and wait for it to climb against BTC. Then you would buy back a greater quantity of BTC. Job done Sats stacked.
If you would have bet on the right coins this year you could easily have 10xed your capitalYou could even have made as much as 100x which means you could have turned $100 into as much as 10k.Experts believe this will happen again in 2021, the only question is which coin do you bet on?My friend and cryptocurrency expert Dirk is personally betting on 3 under-the-radar cryptocurrencies for huge ROI in 2021..
The process is relatively risk free as neither of these assets are going to zero, a very real hazard for your bankroll on a leveraged trade. The risk is that you dont make the gains you would have by not making the trade. This still hurts, of course, but it will not wipe you out.
Best Exchanges & Trading Platforms For Btc Shorting
On most exchanges that provide margin trading services, the process of borrowing cryptocurrency for sale, in short, is automated. BTC is lent by other investors, receiving a fee in the form of interest income depending on the loan terms length. The rates vary but rarely drop below 2% per month. The possibility of BTC shorting is available on such popular exchanges as Binance, Bitfinance, Kraken, and Coinbase.
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When Should You Short
Some marketplaces have lending that allows users to get coins to go short. Of course, the service is paid on average, BTC is given at 0.2% per day. You can short cryptocurrencies on exchanges, such as Poloniex or Bitfinex. They have detailed manuals describing how the mechanism works.
The essence of working with a bear market is to use different opportunities for shorting. Each of the positions is used based on market behavior. The first option involves the selection of coins that are moving towards resistance. The second option consists of working with coins of minimum coiled spring or relative strength. If used correctly, both tactics allow you to find weak currencies, the rate of which should fall soon.
After a trader identifies the currencies that are falling in price, they must accurately determine the moment of shorting. This will affect the profit of the entire operation. You need to not just look at the chart online, but resort to technical analysis. With its help, the starting point of the shorting game is determined.
A signal that it is time to stop may be a triangle the cryptocurrency chart movement along with a geometric figure or a double tops appearance when the rate jumps several times in a short time. When the value of an asset decreases in the market, pay attention to short-term price indicators.
Heres a chart that shows a sharp drop and following stability of BTC in August of 2020: image credit: coinsnetwork.com
How To Close Positions On Binance
You can close your positions on Binance by clicking the close position button and entering a limit price or using the market price option.
You can also close your open position by entering an opposite order. For example, if you have a short position, you need to enter a buy/long order to close your position.
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Is It A Good Time To Exchange Xrpdown To Btc
Binance XRP Short is currently bearish and Bitcoin bullish , which suggests that now is a good time to exchange Binance XRP Short for Bitcoin. This trend is determined by the technical indicators on our Binance XRP Short and Bitcoin price prediction pages. To determine whether a coin is bearish or bullish, we use technical indicators such as the Relative Strength Index and important simple and exponential moving averages.
Please note that technical indicators dont provide a full representation of whats happening in the cryptocurrency market. Before making the decision to buy or sell any cryptocurrency, you should carefully consider both technical and fundamental factors, as well as your financial situation. The cryptocurrency market is also highly volatile, which means it may not be suitable for investors with a low risk tolerance.
Final Word On Shorting Cryptos
Shorting crypto like Bitcoin can be an effective trading strategy. Implemented correctly, experienced traders can take advantage of the volatile digital currency market. And with increasing government regulations and a host of new tokens emerging all the time, prices are constantly rising and falling.
With that said, beginners should avoid shorting strategies due to the increased risks. See our guide to trading cryptocurrencies;for more ideas, including day trading and ETFs.
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How To Short Sell Bitcoin Or Altcoins
There are several methods through which you can short sell an asset. However, I would be discussing the following two simple ways:
Losing More Than Your Deposit
Should your trade go against you, the amount needed to cover your losses will rapidly increase. Once this reaches the value of your balance on the exchange, you will have 2 choices. Either cut and run, losing your entire bankroll, or import more funds to continue the trade. This is known as a margin call and is every option traders worst nightmare.
The analogy is holding onto a helium balloon that keeps rising. Do you hold on forever, hoping it will land eventually? Or do you let go? The smart play is never to get dangerously high off the ground.
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Going Long/short On Crypto On Binance
Most people who have invested in cryptocurrency have opted for the straightforward buy and hold approach. When it comes to Bitcoin and other top crypto assets, this has proven to be a solid strategy and is certainly a viable option for any crypto investor.
However, many cryptocurrency investors want to take a more active approach in an attempt to maximize their gains. These traders want to have the opportunity to make profits regardless of which direction the cryptocurrency market is heading, which isnt possible by just buying and holding.;
Binance has identified this demand from crypto traders and even though it started out as a standard spot trading cryptocurrency exchange, it now offers a wide range of trading products that go beyond spot markets.
In this article, well be going through the ways you can go long or short on cryptocurrencies on the Binance cryptocurrency exchange.;
First, let’s learn a little more about the different instruments crypto traders are using to go long or short on cryptocurrencies.;
Where Can I Short Bitcoin
As we previously mentioned, there are different ways on how to short Bitcoin. This can be done on a wide range of platforms that are widely available for investors all over the world. Some of these exchanges have better features than others and some of them support different payment methods.;
It is up to you to decide which of these exchanges you use to short Bitcoin. There is no platform that behaves better than all the others. You would have to personally analyse each of them to understand which one offers you the best options and solutions.;
But where can you short Bitcoin? These are just some of the platforms that enabled Bitcoin shorting. If you want to bet against Bitcoin moving higher, then these are some of the platforms you can start using right now.;
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How To Sell Bitcoin On Binance App Lite
We recommend using Binance App Lite Mode for a simple and straightforward experience, but you can sell Bitcoin with both Lite and Pro modes.;
1. on your mobile device and login to your Binance account. If you dont have a Binance account, .;
2. In the top left corner of the screen, tap the profile icon and switch to Lite.
3. Tap the trade icon in the middle of the screen and follow the simple instructions.
4. Enter the amount of bitcoin you wish to sell, select your local currency, and enter the amount.
5. Once the sale is confirmed, tap Wallet and choose the local currency you just obtained .;
6. Tap Withdraw, select a payment method, enter the amount, and add the required withdrawal info. If youre withdrawing fiat for the first time, youll be required to link your debit/credit card or bank account, depending on the withdrawal method you chose in the previous step.
7. Youre done. Your money is on its way.
Now you know how to sell crypto into fiat and withdraw your local currency to your credit/debit card or a bank account with minimal fees and fast processing times.;
Do you want to explore other options to sell bitcoin and other cryptocurrencies on Binance?;
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How To Transfer Funds
After activating your margin account, you will be able to transfer funds from your regular Binance Wallet to your Margin Trading Wallet. To do so, click on the Wallet tab, select Margin and click on the Transfer button on the right side of the page.
Next, select which coin you wish to transfer. In this case, we will use the;BNB.
Input the amount you want to transfer from your Exchange Wallet to your Margin Wallet and click Confirm transfer.
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How To Short Bitcoin In 2021
The crypto market has hit an astonishing $267 billion as of May 2020. More and more traders are looking for means to maximize the industry and profit from it. One way traders can profit from the Bitcoin market is by Shorting.
While it might seem like a weird idea to a newbie to Short bitcoins, it simply means selling bitcoin at a lower price.; We all know that the first trading mantra you’d hear as a newbie is buy high-sell low.’
However, with shorting, you are selling bitcoin in the hope that it will fall in price, and you can buyback. Traders are selling the difference in market price. A newbie must learn how to short bitcoin before venturing in.
The first thing that anyone who wishes to venture into Bitcoin shorting needs to set right is their motivation for going into this aspect of trading. Bitcoin shorting relies on predicting a bear market for bitcoin.
So, if you look at Bitcoin from the point of view that it will drop in price, you need to be kept up to date with the happenings in the market.
For some traders who short bitcoin, they do so as a means to hedge against loss. So in learning how to short bitcoin, your initial motivation matters a lot.;
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How To Short Bitcoin
For investors that consider that Bitcoin could move downwards, there is a way to profit from it: short selling Bitcoin. But how to short Bitcoin? There are numerous platforms that would offer you the necessary tools to short sell Bitcoin.;
In this guide, we share with you all the details on how to short sell Bitcoin. This includes information about the venues that are currently available and how to handle a Bitcoin short position, among other things.;
Before we start with the guide, remember this is not investment advice. All the information shared by UseTheBitcoin and its writers is for educational purposes only. Cryptocurrencies are highly volatile and speculative assets.;
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Bitcoin As An Asset Is Risky
Price is just one of several risks you will have to evaluate while shorting the cryptocurrency. As compared to other, more established assets, Bitcoin is nascent. It has been around for only 13 years. Therefore, there isn’t sufficient data or information for investors to make an educated decision about its workings or feasibility as an asset. For example, several issues related to Bitcoin forks are still unresolved. While established platforms like CME are safer and guarantee execution for Bitcoin derivatives, new platforms started off being “clunky” and are susceptible to hacks.
What Does It Mean To Short Bitcoin
If you have heard about the term bitcoin short selling you might be wondering what this term means. And this is a fair question. We are used to handling virtual currencies and Bitcoin through the spot market.;
The spot market makes reference to trading activities in which you buy and sell the asset and the settlement occurs immediately after the order gets executed. That means that if you buy Bitcoin you receive your coins and the seller receives the funds you pay to execute the trade. Everything happens seamlessly and the settlement takes place immediately.;
When trading in the spot market, we want to profit with a price increase. We buy Bitcoin when the price is low and we sell when the price moves higher. This is how traders think and operate in the market. Moreover, if you want to trade against the price of Bitcoin moving higher, you should use a margin account rather than a spot account on an exchange.;
So how do I short Bitcoin?
When shorting Bitcoin, the goal is to sell BTC at a high price, lets say at $50,000, and purchase it again at a lower price, for example at $40,000. As you can see, in order to short Bitcoin, you should own the asset beforehand. This is why it becomes difficult for people to short Bitcoin if they dont hold it before.;
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The Regulatory Status For Bitcoin Is Still Unclear
Though it claims to have global coverage, Bitcoin’s regulatory status across geographies is still unclear. Several leading platforms for Bitcoin trading, such as Deribit, FTX, and OKEx, are not available to American investors. The absence of regulatory oversight means that exchanges have been able to get away with offerings that would not be allowed if there were proper oversight. For example, Binance offered 125% leverage for Bitcoin futures trading until recently. The lack of clarity about regulatory status means that legal recourse for customers of these exchanges is limited.
Binance Futures Fees And Funding
When you open a short or long position on Binance, youll be charged a trading fee when your order is executed at the market, in a similar way to spot markets.
The USDs-M Futures fees depending on your trade volume in the last 30 days can be seen in the image below:
For example, if youve opened a 0.5 BTC position at 32000 USDT. Youll be charged a 3.2 USDT trading fee if it is a limit order. The calculation: /100*0.02
To get a 10% fee discount for futures markets, you can enter the code 10indirim when opening your futures account. Or you can transfer some BNB to your Futures wallet and pay fees in BNB.
There is also funding that traders pay or receive every 8 hour, which is actually more important than trading fees.
Funding is a payment that is exchanged directly between traders who have long or short positions every 8 hours. It exists to avoid price divergence between futures and spot markets.
The rate below funding shows the funding rate and the countdown shows the time left for the next funding payment.
If the funding rate is positive, longs are charged a funding fee and those who have a short position receives funding fee. If the rate is negative, shorts pay and longs receive funding.
Lets say you have a 0.5 BTC short position and Bitcoin is traded at 35,000. If the funding rate is 0.01%, you will receive a 1.75 USDT funding /100*0.01).
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Trading Leveraged Tokens Like Btcup And Btcdown
Binance has created leveraged tokens that can be bought through spot markets. These leveraged tokens give investors leveraged exposure to different. For example, you can buy the BTCUP token if you expect the price of Bitcoin to increase and want leveraged exposure. The opposite is true for BTCDOWN.
Please keep in mind that leveraged tokens are quite complex and should only be used for short-term trades. Due to their design, they can behave in unexpected ways if theres a lot of volatility, especially if you hold them for a longer period of time.;
However, leveraged tokens do offer some advantages in comparison to trading futures. When buying a leveraged token, you dont have to worry about your margin levels or liquidations.;