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In the example below, as my liquidation price is 37, When you have a short position, the limit price should be higher than or equal to the stop price for a stop loss order. Instead of getting liquidated and losing the whole margin, this stop loss order will basically allow me to close the position with an estimated loss of 17 USDT.
If you want to take profit at certain prices, you can place take profit orders by entering a stop price that is below your entry price and a limit price equal to or below your stop price.
When I close my short position at , I will make an estimated profit of 6. But it will not immediately change your liquidation price. Instead, when you increase your leverage, the margin that you can remove from your position will increase. If you add margin to your short position on Binance, your liquidation price will increase. So you can decrease your risk of getting liquidated by adding more margin to your position using the adjust margin option. The margin you add to your position will basically lower your leverage and risk and not change your position size.
As your position size does not change after adding margin to your position, it will not change your potential profits and losses. You can also close your open position by entering an opposite order. The USDs-M Futures fees depending on your trade volume in the last 30 days can be seen in the image below:. The calculation: 0. 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. 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. If the funding rate is 0. When you click on the order, you can see the average price at which the order is executed and your realized PNL profit and the fee charged. To learn how to deposit money into your Binance account and use Binace, you can check out our in-depth Binance tutorial.
Decentralized Exchanges. Cryptocurrency Exchanges. Cryptocurrency Wallets. List of Decentralized Exchanges. Compound Finance Review. Ledger Nano X Review. Trust Wallet Review. How to Trade on Binance Futures. How to Reduce Binance Fees. How to Open a Binance Account. Blockchain Games. DeFi Apps. Home Cryptocurrency Exchanges. Share on Facebook Share on Twitter. Shorting cryptocurrencies is a great way to make money when the market is red. So, later on, when the price will increase, you can buy BTC at the prefixed price only as mentioned in the futures contract which will be less than the current market price.
This makes sure that you will earn a good profit on the asset in the future. However, if you sell a futures contract, it suggests a bearish mindset and a prediction that bitcoin will decline in price. So, when the price will go down in the future, you can sell the coins at the prefixed rate of Bitcoin as mentioned in the futures contract.
This is an option contract that enables you to choose between call or put options. A binary options contract allows traders to have the right to buy or sell BTC coins at a particular price and date in the future. The call option contract enables traders to buy an asset at a future date and the put option allows for selling the asset at future date. To short BTC, traders execute the put option contract, likely with an escrow account.
This states that they will sell BTC at the current price even if the price goes down later on. Binary options are available through a number of offshore exchanges, but the costs and risks are high.
Prediction markets can also be considered when you want to use the short sell approach. These markets allow investors to create an event to make a wager based on the outcome. This is one of the easiest ways to earn profit by selling BTC coins on the open digital assets market. Traders interested in buying and selling actual BTC could short-sell the coins directly. Crypto owners simply sell off the coins at a price they are comfortable with. Of course, if the price does not adjust as you expect, you could also either lose money or lose bitcoin assets in the process.
In order to short-sell BTC, you need to connect with a crypto trading platform like Binance where you can place a short sell order. After this, the trading platform sells BTC coins from their own supply on your behalf, so that you will repay them later with the same number of coins.
If you place the order of short selling 12 BTCs, you will have to return them exactly 12 BTCs, irrespective of whether the price goes up or down. If the price of asset declines, it will be easier to buy these 12 coins back. But if the price increases, it will be much expensive. Make sure to read the rules, regulations, and guidelines of the firm and individual from whom you are borrowing the BTC coins. The drawbacks of traditional short-selling have created a growing interest in derivative products as an alternative method of short-selling bitcoin.
Derivatives are financial instruments that take their price from the underlying market, in this case, bitcoin. With this approach, there is no need for you to borrow coins from a third party, as you are simply speculating on the future direction of the market.
A popular derivative is CFDs:. CFDs are an agreement to exchange the difference in the price of a bitcoin from when the position is opened to when it is closed. You would open a position to sell a bitcoin if you believed it was going to decline in price.
However, there are still two parties involved ï¿½ the trader and the broker. At the end of the contract, the two parties exchange the difference between the price of the cryptocurrency at the time they entered into the contract and the price of the cryptocurrency at the end. Essentially, the trader is paying the difference between the opening and closing price of the cryptocurrency they are trading.
The simplicity of entering and exiting positions, compared to other trading vehicles, is just another reason why short-selling cryptocurrency CFDs are very popular.
As with any investment, learning how to short-sell Bitcoin is not a walk in the park. It takes research and some willingness to take the risk. Most financial advisors would equate it with gambling. Just make sure that you invest in Binance shorting not more than you can afford to lose.
As there is always such a risk. Can you short on Binance? How to short on Binance? And here I am going to share the step-by-step guide on how you can short bitcoin on Binance. Create an account It will take you about 10 minutes total to register your Binance account.
Keep in mind that Binance basically gives you two separate wallets that act like separate entities: Regular exchange-wallet for use without margin Margin-wallet which can be used for margin trading. Deposit your Margin-wallet Go to your Margin-wallet to transfer your funds from your Exchange-wallet. Analyze the market Analyze the market through charts and indicators.
Select trading pair and create a short order Time to enter a short. Borrow extra coins via margin After you selected the trading pair e.
Buy BTC coins back You wait until price drops and buy cheaper bitcoin with your newly bought crypto e. Is Binance a good exchange for shorting? And here are a few reasons why it is worth using for short trading and not only: Offers hundreds of crypto pairs to trade on Low trading fee which is about 0. It is free.
The risks of shorting Bitcoin The first thing you should realize is that short-selling any asset is a high-risk transaction. What is shorting Bitcoin?
Margin trading on Binance is also available. Futures Market Bitcoin like other assets has a futures market. Binary Options Trading This is an option contract that enables you to choose between call or put options. Prediction Markets Prediction markets can also be considered when you want to use the short sell approach.
How to short cryptocurrency? Short Cryptocurrencies via CFDs ï¿½ Derivative trading The drawbacks of traditional short-selling have created a growing interest in derivative products as an alternative method of short-selling bitcoin.