Binance Trading Methods : Trading Spot/Margin/Futures
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One of the most important platforms in the crypto industry is undoubtedly "Binance", not only because of all its initiatives, but it is one of the most liquid exchanges with the highest capitalization that exists today, so this makes it one of the safest places to invest in terms of cryptomoney. In my opinion, it also has one of the largest security systems and a fund called #SAFU in case this system is breached to seize funds and thus respond to possible losses that users may have on the platform if a hacker attack occurs.
This is only part of the benefits offered by the "Binance" platform. In a future post, I could detail all the other aspects it has, with which we can earn money either by saving, lending or staking some currencies, however, in this post I want to detail the most important aspects that this platform has to perform the exercise of trading.
What is Spot/Margin/Futures trading?
Trading Spot: It would be the gateway for all those who are starting to trade, it is the widest market for its variety of trading pairs of the most important projects in the industry as "BTC/USDT/ETH/BNB" among other markets that make robust and attractive to this particular, is what I consider to be less risk, compared to Margin and Futures. The tools I use are very intuitive and easy to understand for any initial investor whether you are a scalper, Intradia or swing trader, so if you are looking to enter the Cryptoactive trading, this is the best gateway without any doubt.
Trading Margin: This would be the next step, although a little more tedious for those who do not understand loans and repayments, since this platform lends you the money leveraged with a maximum of 5x in the selected currency, that is, it multiplies your capital by 5 times. A clearer example of this, is if we have a capital of $100 and we multiply it by 5, we would really be trading with $500, but we must be careful, as we must know how to manage our risk correctly. As I have always recommended to everyone I have had the opportunity to guide, never risk 5% of your total capital and never leverage yourself to the maximum that the platform allows, because the volatility in cryptomonies is so high that you could easily liquidate your positions without realizing it. I should also note that the platform for Margin has the same tools as SPOT to date.
Trading Futures: Finally, and the most competitive and developed in such a short time is "Futures" that offers a wide market with liquidity and pairs in USDT, accompanied by various tools for risk management and hedging positions, but carries high levels of risk because of its leverage (which is usually very attractive to traders), however, the same case as in the case of Margin, we must know our risk management, risk the least per trade, which will allow us to be more in the game and have more opportunities and never leverage with the maximum.
What are the main differences between these methods?
Basically, the difference between each of these three trading methods for trading through the Binance platform is "RISK". To be clear, trading in the "SPOT" market means that we will have less risk in each trade compared to the Margin and Futures market.
This is because in the SPOT market we work with our own capital and only have one direction for the odds to stack up in our favor, i.e. we will only look to buy cheap to sell expensive, as this is the only way to win in this method of trading.
Now if we go to the method of trading "Margin or Futures", we would be working with leverage and / or loans by the platform and users. Although it sounds very attractive and of course we could have big profits, the reality is that we could also have big losses in the blink of an eye if we don't know all the details involved in these last two methods.
Another notable difference is that in the Margin and Futures trading methods, we can trade by placing the odds in our favor both up and down, that is, we can buy cheap and sell expensive, as well as sell expensive and buy cheap to keep the difference.
Which market do I think brings better performance for traders who are just starting out?
For all those who are in the process of learning and are passionate about the financial world and trading, but are looking for an intuitive and easy to use platform, this is definitely "Binance". Now, the market that I would recommend to start for any trader is "SPOT" without a doubt, as I already mentioned trading in this market implies having less risk at the time of trading, it has many tools that help everyone to have a proper risk management and with their own capital.
Another thing that I recommend and that is extremely important is to always place a "Stop Loss" on each trade, this is associated with always risking according to my appreciation and experience, maximum 5% of your capital for each trade.
I will be making a series of publications about the "Binance" platform, so you can know all the benefits and advantages that it offers with respect to others in the market. This publication is an initial introduction of what trading methods we can achieve in Binance and the definition associated with each of them.
If you have any doubts about any method, please do not hesitate to include it in your comments. I would like to know if the community knows the Binance platform in depth or what they think about it, I will read and answer each of your comments.
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