In the past year, the crypto futures derivative segment has grown tremendously with transaction volume reaching $ 2 trillion in the first quarter of 2020. Although this is just an emerging market, now It was enough to challenge the spot market.
On the Binance trading platform, Binance Futures has outperformed the spot markets as more and more investors are looking for new ways to use their cryptocurrencies. To meet this growing demand, Binance Futures has implemented its Quarterly Futures.
What is a futures contract?
Futures contracts allow traders to speculate on the direction of asset movement, using leverage. It helps investors to hedge against unpredictable price movements and minimize portfolio risks.
A futures contract is an agreement to buy or sell an underlying asset at an agreed price and at a specified time in the future.
Table 1: Specifications of the contract
| Symbol | BTCUSD Quarterly 0925 |
| Base trading pair | BTC/USD |
| Contract type | Quarterly |
| Minimum fluctuation price range | 0.1 USD |
| Minimum order quantity | 1 contract |
| Maximum order quantity | 100,000 contracts |
| Maximum number of open positions | 200 |
| Payment assets | BTC |
| Number of contracts | 100 USD/ contract |
| Price limit | ± 15% |
| Liquidation fee | 0.3% |
| Date of contract transfer | 3:00 PM September 25, 2020 (Vietnam time) |
| Contract transfer fee | 0.015% |
A quarterly futures contract on Binance has the following characteristics:
- Payment in BTC: The contract is priced and paid in BTC. Therefore, it will help new users to easily enter this market.
- Due/transfer date: The BTCUSD Quarterly 0925 contract will expire at 3:00 pm on September 25, 2020. Users should note that the system will not accept new orders 10 minutes before the expiry of the contract.
- Contract multiplier: The contract multiplier represents the value of a contract. Each Quarterly Futures contract on Binance is worth USD 100.
Why should you trade Binance Quarterly Futures?
1. Lowest market price
To celebrate the quarterly futures launch event, Binance Futures held a 30-day limited offer, offering users a fixed taker fee of 0.02%, and a maker gets a negative maker fee. With this offer, users will be able to use a lower fee schedule for a limited time.
Table 2: Fee schedule on Binance Futures
|
|
|
|
|
|
|
(First 30 days offer) |
|
|
Level |
30-day trading volume (BTC) |
And/or |
BNB balance |
Maker |
Taker |
Maker |
Taker |
|
VIP 0 |
<250 |
or |
≥ 0 BNB |
0.005% |
0.029% |
-0.010% |
0.020% |
|
VIP 1 |
≥ 250 |
and |
≥ 50 BNB |
0.004% |
0.028% |
-0.010% |
0.020% |
|
VIP 2 |
≥2,500 |
and |
≥ 200 BNB |
0.003% |
0.027% |
-0.010% |
0.020% |
|
VIP 3 |
≥7,500 |
and |
≥ 500 BNB |
0.002% |
0.026% |
-0.010% |
0.020% |
|
VIP 4 |
≥22,500 |
and |
≥ 1,000 BNB |
-0.001% |
0.025% |
-0.010% |
0.020% |
|
VIP 5 |
≥20,000 |
and |
≥ 2,000 BNB |
-0.005% |
0.024% |
-0.010% |
0.020% |
|
VIP 6 |
≥100,000 |
and |
≥ 3,500 BNB |
-0.006% |
0.024% |
-0.010% |
0.020% |
|
VIP 7 |
≥200,000 |
and |
≥ 6,000 BNB |
-0.009% |
0.024% |
-0.015% |
0.020% |
|
VIP 8 |
≥400,000 |
and |
≥ 9,000 BNB |
-0.012% |
0.024% |
-0.015% |
0.020% |
|
VIP 9 |
≥750,000 |
and |
≥ 11,000 BNB |
-0.015% |
0.024% |
-0.015% |
0.020% |
Similar to the futures BTCUSDT futures contract, users can trade BTCUSD Quarterly 0925 contracts with up to 125x leverage, helping users to exaggerate small price movements to bring greater profits.2. Flexible leverage up to 125x
With leverage, users can also achieve a higher level of capital efficiency because it increases the exposure to the underlying asset by a fraction of the market value.
The advantages of trading Futures
- Flexibility - The futures market offers flexibility, allowing investors to long and short an asset using leverage. This flexibility allows users to set market-neutral trading strategies.
- Diversification - Futures contracts are extremely useful in diversifying the portfolio. There is no need to guarantee the full value of the crypto asset, the futures contract allows investors to contact the underlying asset, only need to spend a small part of its market value. As a result, investors can diversify their portfolios effectively.
- Liquidity - With a total trading volume of over 2 trillion USD, the derivatives market possesses deep liquidity to reduce financial risks. Abundant liquidity also helps the process of value creation and trading activities on the market take place more quickly and effectively.
Two strategies to diversify your portfolio
Usually, professional investors approach the futures market to find the least profitable correlation strategies. Similar strategies can also be applied to cryptocurrencies through the use of futures contracts.
1. Transaction of a price difference
Price spread trading is a trading strategy based on the difference between the futures price and the price of underlying assets on the spot market. This difference can be positive or negative, but often futures contracts will cost more than the spot market. The further away the futures contract is from the current time, the greater the difference
Basic transactions will exploit the value difference between these two markets, also known as "cash and carry".
- How to set up a price difference transaction?
Buy 1,000 USD Bitcoin on the spot.
Short of 10 BTCUSD Quarterly 0925 contract.
At the time of maturity, sell all Bitcoin held.
2. Strategy Swaps vs. Futures
The shape of the futures curve is important for hedge investors and speculators, as it indicates whether the futures market is in contango or backwardation.
When the market is in contango state, the price of futures will be higher than the spot price of the underlying asset. Conversely, if the market is in a backwardation state, the price of futures will be lower than the spot price.
Swaps are derivatives whose prices fluctuate most closely with spot prices because they have no maturity date. On the other hand, quarterly futures are priced much higher than swap contracts. Therefore, investors can place orders based on the relative price difference between forwarding contracts and long-term futures contracts based on a gradual curve or gradual curve.
The event of introducing quarterly futures contracts has increased the number of derivative products on Binance to 4, including Leveraged tokens, Quarterly Futures, Perpetual Futures, and Options
Having new products will allow users to make better use of their crypto assets and diversify their portfolios by adopting non-linear trading strategies.
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Learn more: What is the Binance Open Platform? Explained in detail