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8 de abril de 2022

Binance – profit with the leader

Binance – profit with the leader

Cryptocurrency assets are one of the most popular tools for making quick profits on intraday and medium-term transactions. But, any strategy will be unprofitable without a reliable broker, especially if you plan to regularly trade in large volumes. For stable profits, choose a good crypto exchange like Binance.

What is Binance?

The company was founded in 2017 in China, and since 2018 holds the leadership among crypto exchanges in terms of trading volume. Spot, margin, futures, and P2P markets for the purchase/sale of cryptocurrency assets, including NFT, are available to traders.

Like most cryptocurrency exchanges, Finance operates in offshore jurisdictions: Malta, Bermuda, and Jersey. This approach makes it possible not to publish detailed reports on financial activities and accounts where customer funds are stored. An affiliated company Binance US is open to clients from the USA.

The official website does not mention the presence of international licenses for exchange activities, only memorandums of cooperation with the authorities of offshore zones are mentioned. This increases the risks for clients, especially after the exchange claims that several client accounts have been hacked over the past two years.

But if you look at the entire cryptocurrency trading market, this situation with licenses and risks is quite standard. For example, in the Forex currency market, most brokers are also offshore; it will be difficult to make claims to the client even with licenses and regulatory control.

Starting Binance trading, observe the main rule of risk management – "we risk only the money that can be lost without problems for our financial security".

Account registration

The image shows the process of registering a new account on Binance. First, we write our E-mail address and password. We confirm the E-mail and proceed to the second step – verification of personal data.

Verification to start trading is required to replenish the deposit and start trading on Binance. In addition to confirming the phone number and a copy of documents confirming the identity/address, you must take two selfie photos. The first is with a document on which photos and data are visible; the second is with the text "Binance" on paper. The company has the right to request additional documents or refuse verification without explanation!

A check:

Detailed personal data deprive the client of anonymity as one of the main advantages of cryptocurrencies. But, Binance US margin trading is already a professional activity, without verification it is impossible.

Important! Always provide valid data and copies of documents, preferably in Latin. It is not recommended to use a VPN when registering and uploading documents to hide the real address of the entrance to the exchange. This can lead to problems in the future even if you are in the "right" jurisdiction for the exchange.

Trading platforms

The software is available for desktop (Windows, MacOs, Linux) and mobile (Android, iOS) operating systems. Installation is simple and shouldn't be a problem. The only limitation for Windows: is the 64-bit version only. It is recommended to immediately enable the two-step Binance US login to ensure account security!

The exchange's capabilities are described based on the desktop version of the software. All functions are also available in mobile versions.

Important! Then there will be a description of the trading terminal and examples of strategies. It is assumed that the reader has basic knowledge of stock trading: types of price charts (candles, bars, lines), market orders (market, limit), and money management parameters (Take Profit/Stop Loss, a lot). It will be useful to have experience working on other trading platforms before starting to open trades on Binance: MetaTrader 4 is one of the most popular terminals will do. See all the necessary information in our blog.

Trading terminal

To quickly start trading, the exchange offers a Classic trading terminal where you can sell/buy cryptocurrencies without leverage (spot). This option is suitable for AltCoins with low cost and capitalization and does not require a large initial deposit. A separate wallet is opened for each currency; additional Binance US trading fees may arise when converting "inside" the total deposit. They are small and do not greatly affect the final result.

On the "Margin" version, leverage can already be used and thus "classic" trading is provided when positions are opened for an amount greater than the current deposit.

The "Strategy Trading" option gives you the opportunity to trade on the "grid" strategy to get a profit on any market movement, without technical indicators and detailed market analysis. Refers to automatic trading, which is not considered in this article. Binance grid trading is not recommended for beginners!

The functionality of the terminal for derivatives is the same as for spot; the only difference is that futures for cryptocurrency pairs are used as an asset. They have a maturity (expiration), but if the “Perpetual” option is selected, this is not there, so the trading process and strategies are no different from a regular spot, for example, in the Forex currency market. Further in the article, the futures terminal will be used as the main one, you can also use demo online trading on Binance.

Futures terminal deposits only support USDT (Tether) and BNB (Binance coin).

The figure shows the main elements of the interface:

#1. Charts and indicators.

We are starting to look at how to use the terminal Binance. You can watch the market for the following types of prices:

  • Index. Asset quote on Binance.

  • Market. The price will be the average value of open orders of Binance and other exchanges from the TOP-10. It can be either more or less Index Price.

  • Last. The price of the last concluded transaction on a financial instrument. Traders' attention: all technical indicators must also use the Last price for calculations. Otherwise, the data will be incorrect!

Three types of price charts are also available:

  1. Original as an element of the Binance terminal.

  1. TradingView. Charts from this popular service are familiar to traders from many brokers and signal services. The price is the same as the Original.

  1. Depth. Shows the current number of BUY (Long) / SELL (Short) trades. In other words, this chart measures the current balance of power between buyers and sellers. Information on Binance transactions only, on other exchanges the balance may differ!

Trader's comments:


The basic set of technical indicators such as Moving Average, overbought/oversold oscillators (RSI, Stochastic), and trend dynamics (CCI, Momentum, TRIX) are present in both types of charts. Difference of TradingView: more non-standard instruments, there are graphic patterns (Fibonacci, Gann, Elliot Wave), chart type selection (Candle, Bars, Heiken Ashi, Line, Area).

TradingView gives more opportunities to professional margin trading on Binance. If you use simple strategies on "classic" indicators, the Original is enough.

#2. Order book.

Shows the volume and price of BUY/SELL orders accepted for execution by the Binance exchange. Please note that the list also contains pending orders that are not currently open. Based on the dynamics of Order Book changes, it is possible to make forecasts of price movement for the near future and the balance of power of buyers/sellers. Although the balance is more clearly visible on the Depth graph.

An increase in market interest in a certain price zone (especially pending orders) may indicate that market makers have created a strong support/resistance level or a local max/min. Also, the "extreme" upper and lower values of Order Book can be used in hedging (examples of trading on Binance are read further in the article). The price of orders can be transferred to the opened order with one click to save time! Filters are available by order type and price change.

The price of orders can be transferred to an open order with one click to save time! Filters are available by order type and price change.

#3. New order parameters.

First, select the leverage mode. By choosing a "Cross" for trading Binance, the trader risks the entire amount of the deposit, regardless of the size of the order. The technique is familiar from other terminals, such as MetaTrader: the movement of a transaction increases profit, against – losses. If Stop is not set, losses can completely take away the deposit. In the "Isolated" mode, the trader determines the amount of the deposit in USDT, which will go to a loss. When the amount is reached, the position is automatically closed.

Trader's comments:

Question: if you need to limit losses, what is the difference between Isolated Margin and Stop Orders? Answer: the simplicity of money management, especially for beginners. We set the amount, then we don't think about calculating Stop in points and other parameters.

You can open trades with different leverage, volumes, and profit targets. In any case, the loss on Binance us margin trading will be fixed. Although with intraday and long-term transactions, Cross-margin will be better for periods of prolonged corrections and pullbacks. And if, of course, the deposit amount allows.

Let’s move on to "Adjust Leverage". It should be understood that the larger the value is selected, the faster both Profit and Loss will grow. The main task of any money management system is not quick earnings, but the ability to “be in the market” for as long as possible to compensate for possible losses. Start trading on Binance with 5x, then you can move to 10x with a decrease in the average position volume!

Now you can start trading. Orders available:

  • Market.

With immediate execution at the current (Index) price.

Post only. A market order that is only added to the Order Book without immediate execution, even when the market allows it. It is usually used only by Binance margin trading market makers to create market liquidity and set price benchmarks for possible market movement.

  • Limit. 

Opened when the price is above (for Long)/below (for Short) the specified price value.

Binance order setup is standard: the order opening level is selected above/below the current price, the Take Profit/Stop Loss value in "numbers" or as a percentage of the Open price. Next, is the Long/Short direction, the order is marked on the chart and the “Open Orders” tab read more about the Limit (Pending) order on the blog. Everything related to Forex pending orders can be used on the Binance exchange!

Trader's comments:

The basic option for choosing the volume of the opened order is the percentage of the deposit, which is selected on the scale below. This is inconvenient, especially when you need to open a deal quickly. Even choosing "round" values, such as 10%, takes a lot of time. You can do it faster: in the “Size” item, remove “0%” and determine the order volume in USDT or BTC. For example, 2350 USD or 0.02 BTC. It is recommended to start with percentages so it is easier for beginners to calculate and control money management in trading strategies on Binance.

  • Stop Limit/Market. 

Binance defines this type of market position as a combination of Stop Loss and Limit order. In terms of the set of parameters and the method of opening, they look no different from the Limit order. In trading strategies, they are used as another option for controlling the loss on an open transaction. Let's see how it works:

The TP/SL section and the size settings are the same for all Stop types, the parameters are the same as in the Market/Limit order.

#1. Stop Market. 

The order will be opened when the "Stop Price" level is reached, where the order should be shown in the image. The main rule for compensating a loss on a transaction is that the order must be the reverse of the main one (LONG/Short and SHORT/Long).

#2. Stop Limit.

It opens in two steps: when the “Stop Price” is reached, the Binance US opens an order at the “Price” level. These are different values ​​as shown in the image. Stop Limit can be activated, but not opened if the price reverses in the range: Price - Stop Price! Thus, a trader can:

  • Set a guaranteed order opening price for any slippage when the actual opening price differs from the order. All cryptocurrencies can sharply increase volatility, and then Stop Market can be executed with a “big” loss than planned.

  • If the price turns around the "Price" level, the transaction remains open; the trader can exit with a smaller loss. Or continue to control the position to return to profit on the next trading strategies on the Binance signal

We have understood how Stop orders work, now the question is: why are they needed, and how do they differ from loss control according to the standard Stop Loss known to all traders? Let's start with the main problem: orders remain open after closing the main position (#3 in the image), they need to be closed manually.

The reason is as follows: if the usual Stop Loss is an option for an open position that closes automatically, then Stop Limit/Market is exactly market orders. To do this, they have TP/SL section. "Stop" in the name only confuses beginners, in fact; these are ordinary Limit orders only opposite in direction. Everyone can make sure by opening them separately through the terminal.

Trader's comments:

Not everything is bad. In addition to the ability to “catch” a reversal into profit on the Stop Limit price difference, you can work on money management with a gradual closing of losses using Stop orders of different sizes (#4 in the image). This Binance US margin trading strategy is known to traders as "averaging" when new Stop orders increase the volume of the first position (Short example). Then, during a reversal, you can quickly reach the level without loss and move into profit.

The second reason for using a Stop order will be the difficulty of quickly changing the Take Profit/Stop Loss values ​​for an open position. In the Binance trading terminal, it is impossible, as on other trading platforms, to change the level simply by "dragging" the chart to the desired value. You need to go into the settings and change them manually. Faster opening/closing Stop order "according to the market". Not recommended for beginners!

  • Trailing Stop.

Automatic method of control loss. If in previous orders the Stop level had to be opened and moved manually, Trailing will do it without the participation of the trader. The tool is present on all trading platforms:

The example of strategies Binance shows how Trailing Stop follows an uptrend at a distance of 3% from Mark or Last Price. On a rollback, the order is closed, fixing the loss. Then the market went flat, you can wait for the next entry point. If the downtrend had continued, the losses could have been greater!

Everything is fine with the example; let's move on to the "features" of the Trailing Stop on the Binance terminal:

  • The presence of the "Activation Price" is correct: it is useful to wait for how the transaction will go, when there are signals of a stable profit, we add loss control.

  • It is not very convenient in trade on Binance to determine the amount of deviation from the current price (callback rate) only as a percentage. The cost in US dollars is more universal, but there is no such possibility. We can only recommend looking at the average volatility and trend lines when calculating the percentage (trading should be higher/lower). We don't use it when moving sideways!

  • The choice of the volume that closes when the order is triggered is also not very clear. The "classic" purpose of Trailing is to automatically close the entire position when a loss begins. Here you need to manually select the amount of USDT or BTC!

  • The answer to why there is a choice of Trailing Stop size on Binance US margin trading is simple: it is also just a Limit order that moves behind the price. It also needs to be closed manually! An order can simply be opened in the terminal as a separate position – this can lead to confusion and unclear results.

Trader's comments:

Trailing Stop on the Binance terminal is more difficult than on other platforms, but you have to work "as is", if you choose the right deviation percentage from the price, everything will be fine. Always check the "Open Orders" list for "extra" orders after closing a deal.

  • Types of execution orders in margin trading on Binance.

It is recommended to leave GTC (Good Till Cancel) then the order is guaranteed to be opened in full, valid until manual or automatic closing. Suitable for most trading strategies from scalping to intraday and longer.

Other variants:

  • IOC (Immediate Or Cancel). It is opened immediately at the maximum liquidity of the asset, and the rest of the volume is canceled. We remind you: to open an order, you must have a sufficient number of reverse orders in the Order Book. For Long to increase, these are Short orders to reduce the price. For Short, the situation is reversed: a sufficient volume of Long orders is needed.
  • FOK (Fill Or Kill). The order must be opened immediately with full volume (GTC order may be delayed with execution). Otherwise, it is canceled, and removed from the Order Book.

#4. Information on open orders.

The information is standard for trading terminals. We see a list of open positions (using SELL for BTC/USDT as an example), limit orders (Open Orders), transaction history, and API access keys.

By open order Binance US:

  • Entry Price. An order is opened or a Limit Long/Short level is set.

  • Mark Price. The liquidation level (price) is calculated from it. In our example, it is lower than the opening, which gives an additional "corridor" for periods of pullbacks and corrections.

  • Liquidation Price. The level at which the loss on an open position will be equal to the entire current deposit or part of the Isolated margin is used. Forex traders know this situation as the «Margin Call».

Trader's comments:

You can see where Liquidation Price is only after opening (market) or placing (limit) an order. You can find out the price on the order parameters calculator, with fast trading it takes time and you can miss the entry point.

This is a disadvantage of Binance trading, but approximately for both Isolated and Cross (if the maximum order size is on the selected leverage) margin, it will be as a percentage of the transaction volume.

Examples:

  • 5x leverage = Liquidation Price by 20% of the order opening level;
  • 10x = 10% of Open Price;
  • 20x = 5%;
  • 100x = 1%.

The second problem of the terminal: if you change the volume or leverage value on an open transaction, the level at which the liquidation will take place does not change. New parameters will be applied only to the new order. On other cryptocurrency platforms, the new values ​​​​may be applied immediately, on Binance you need to be careful.

The only option to "push back" the Liquidation price while the transaction is open will be to replenish the deposit without Binance trading fees. Then the percentage of the deposit in USDT will be less, and the level of liquidation will be more comfortable.

  • Margin Ratio/Margin. The volume of an open order "in the money" with leverage (Ratio) and as a percentage of the current deposit. In the right part of the terminal, the "speedometer" clearly shows the Margin volume for all open transactions. You can quickly view the load on the deposit if you need to adjust money management or add USDT to the account.

  • PNL/ROE (%). This shows the current profit "in the money" (PNL) and the percentage of the deposit (ROE). Which result is considered the main one is decided by the trader: for scalping trading strategies on Binance, it is better to look at PNL, for intraday and longer, it will be optimal to close the deal when the planned ROE percentage is reached.

On the right panel in the "Faucet" section there are two important parameters: 

  1. Unrealized PNL. The maximum profit that can be received from an open transaction. In our case, for SELL, the value is determined by: (Entry Price - Mark Price) * Size Order.

Trader's comments:

Orders are opened in BTC. At the same time, for the deposit, the volume of the futures terminal order is calculated in USDT and depends on the chosen leverage. Example:

  • 46990.50 (1 BTC) / leverage 10 = 4699.50 USDT from the deposit;
  • 46990.50 (1 BTC) / leverage 5 = 9398.10 USDT from the deposit.

Trading Strategies

Finished with the interface, let's move on to how to trade on Binance. The first rule: there are no “special” and “author's” strategies for cryptocurrencies! Most of the techniques of technical analysis work well on assets from the TOP-10 in terms of sales. Let's see some examples:

On the left is a moving average trending strategy known as the "Sidus Method". The signal to open a position will be the intersection of the "fast" WMA with the "slower" EMA, as shown in the figure. You can open a Market order immediately after the crossing or a Limit order at a distance of 3-5% from the crossing price. Then we work on money management, you can use Trailing Stop by the WMA level on a strong trend.

On the right is also the classic combination "channel indicator + oscillator". If «Sidus» makes a profit only during on-trend periods, channel instruments work on a sideways movement (flat). Also simple signals: the price from the channel boundaries is confirmed by the oscillator by exiting the overbought/oversold zones.

Take Profit /Stop Loss is placed on the channel borders, the confirmed breakdown will be the beginning of a new trend, we start trading on "Sidus".

More examples of trading strategies on Binance could be shown, but it doesn't make much sense. Most technical strategies work on combinations of trend and channel indicators, which are confirmed by oscillators (overbought/oversold, trend dynamics). The terms of transactions are also standard: MA crossing, rebound/breakout of the channel borders, reversal of oscillators from the extreme zones or the zero level.

Trader's comments:

Before how to use Binance in the US with technical analysis, know: new or small-volume altcoins do not attract the attention of large players for long-term investments. They are more for speculative profit: you can easily get into the well-known Pump&Dump scheme.

The price is artificially inflated by several owners of large packages of coins, then they come out at the maximum price, which then drops sharply. Technical indicators cannot predict when this will happen. Use only scalping strategies on "small AltCoin", then technical analysis can give the right signal!

Нow to trade on Binance using candlestick analysis

For example, several reversal candlestick patterns. The figures work correctly, giving a leading signal of the beginning of a new trend. The main rule is “the larger the timeframe, the more reliable the signal”.

Also, the strength of the signal depends on the trading volume and the total liquidity of the asset. Reversals are usually formed by market makers with large volume orders. Logically, they have more interest in Bitcoin or Ethereum than in small AltCoins. But, even on speculative coins, reversal patterns can be traded with additional confirmation. Read more about candlestick analysis on xSignals blog.

Trader's comments:

Hedging strategy

The opening of only one (Long or Short) transaction on the asset came to Binance trading from the stock market. There it allows you to reduce the amount of speculation, here it can be a problem, especially when there is a sideways movement and you can get additional profit from opposite trades.

The solution to the problem will be hedging when you can open opposite trades on the same chart. Setting up the terminal:

Important note. "Hedging" is also called the simultaneous opening of trades in two or more assets that move oppositely (inverse correlation). For example in the Forex currency market: EUR/USD (Euro/dollar) and USD/CAD (US dollar/Canadian Dollar) have an inverse correlation. If we open positions on the Euro uptrend:

• BUY (Long) on ​​EUR/USD.

• SELL (Short) on USD/CAD.

If the correlation continues, we earn two positions. Such trading is also possible on Binance, although stable reverse movements between cryptocurrencies are almost not found. Once again that hedging on Binance margin trading is an opportunity to open a LONG/SHORT position on one asset:

Let's see how this opportunity can be used in trade on Binance:

#1. Hedging on trend reversal.

Long is open at the close of the first breakdown candle of the upper border of the channel. The solution is wrong: you need to wait for another 1-2 candles to confirm the new uptrend. The deal is in profit, but Stochastic gives a leading signal of a false breakdown (down from the overbought zone). 

In order not to close the first trade that moves to take profit, let's a hedge – open the second one for a short position, as shown in the figure. Then, after the start of the reversal and confirmation from trading strategies on Binance, we close a long position near the take profit and get more profit from the downtrend.

#2. Channel hedging.

A narrow side channel with maximum/minimum limits for the Bollinger Bands trend indicator. From the point of view of Binance US margin trading, there is a period of "consolidation" in the market.

The strength of sellers is greater than buyers, the breakdown of the lower border of the channel, the beginning of the downtrend with the opening of a Short position. Cancel Long, control the open transaction. If the trend is gaining strength, add a Trailing Stop.

#3. "Lock" – is the most common hedging mistake.

This mistake in hedging one asset continues to be made by both beginners and experienced traders on any trading strategies on Binance. The image shows one of the situations of the appearance of a "lock".

Also a side channel and a breakdown of the upper border. The movement is fast, possibly on the release of strong news. Opens Market Long for a quick profit on the reaction of the market. The price does not reach Take Profit, rollback by one candle, and continuation of the uptrend. The price “closed” the rollback, but the trader keeps the deal hoping to Take a Profit.

The second rollback begins - an error in opening a hedging Long order without confirmation from the indicators. The decision was made on emotions that are always strong in a fast market. In our case, it was necessary to open a second deal below the level of the first one (above for Short). Then the downward momentum was enough to "block" the first Stop Loss and exit the market without losses.

The market turned around again before the second Take Profit and went into a side flat. Remember this situation before how to trade on Binance: two open positions between Take Profit and Stop Loss - a classic "lock" that can last from hours to days. A simple solution to the problem: close transactions with a loss that will be less than the maximum possible - Short is in profit and compensates for part of the deposit.

Professional traders use more sophisticated techniques to get out of such situations. For example, opening additional trades "inside the castle" to receive compensating profits. When it is more than two Stop Loss positions can be closed. This requires careful calculation of TP/SL parameters, trade volume, and accurate opening!

Trader's comments:

The main reason for the appearance of “locks” is that doubts about one’s rightness lead to panic at the first sign of a reversal and loss. The result of such reactions: there are several open "locks" on the chart, the total amount of losses, which can lead to the loss of most of the deposit. Cryptocurrencies are volatile; any trend is accompanied by pullbacks and corrections. You need to be able to calmly wait for the continuation of the movement!

Hedging a single asset is always a risky way of Binance margin trading, regardless of the strategy. You always need to wait for confirmation from other technical tools and graphical analysis for the opposite transaction. It is also not recommended to open positions of the same volume if you hedge market orders in "real-time". Let the following trades be smaller – if the reversal is confirmed, you can always add volume. Even if there is a "lock", you can get out of it with less loss!

Set a Trailing Stop only on a trade that starts to make a profit. If you put Trailing on both positions at once, which then fall into the "castle", you can lose control over the situation. For example, forgetting to remove an “extra” order, etc. Even if there is no “lock”, the Binance terminal does not work very correctly with opposite Tailing’s, it is better to use regular TP/SL or Stop order when hedging.

Last tip: hedge only an Isolated Margin, so you will always know the maximum loss on the "lock"!

Signal service and trading strategies on Binance

Trading signal services can be useful for a trader for two reasons:

  • As an additional confirmation of its strategy. It is always useful to see one more opinion on where the market will move. Especially on cryptocurrencies, where the situation can quickly change on the next 5-7 price bars. The service gives only recommendations, the decision always remains with the trader!

  • You can get confirmation from other indicators without setting them on the chart. If you visually analyze a lot of data, you can make a mistake even in a simple situation. For example, the first signal from trend indicators on the chart, and then we confirm the dynamics of a new movement on the xSignals service

Looking at an example:

Another popular strategy is known as the "Puria method". With the combination of "fast" (EMA) and "slow" Moving Average, the intersection indicates a reversal or continuation of the trend. The MACD oscillator confirms the signal.

xSignals also indicate a strong trend. To do this, the CCI (Commodity Channel Index) indicator is used: the growth of the indicator (signal strength on signal) indicates an increase in trend dynamics, a decrease - you need to wait for a reversal and close positions.

For more trading strategies on Binance on technical indicators and confirmation signals for Bitcoin and Litecoin, see the blog.

Summarize.

Trading on Binance provides all the opportunities to get a stable profit from cryptocurrencies. A large selection of assets, the ability to use hedging positions, and a large selection of technical analysis tools allow you to implement any short-, medium- and long-term strategy. The interface, in comparison with other exchanges from the TOP-5, has certain disadvantages. But, they do not have a significant impact on the process and planning of the trading process.