Futures trading is highly sought after, offering opportunities to go long or short. Binance, a leading platform in this space, faced restrictions in Europe. Discover the reasons behind this move!
A futures contract (or futures) is a financial instrument that provides protection against price fluctuations of digital assets. It is typically used to hedge against the risk of price increases or decreases across all markets including cryptocurrencies, forex, commodities, and more.
This contract involves two parties : someone looking to hedge their position and another who agrees to buy or sell at a predetermined price.
Futures contracts are characterized by 3 main elements :
For futures trading or forward contracts, closure occurs on a predetermined date. This allows users to know in advance when they will recover their investments.
This means that trading orders don’t only generate profits but can also result in losses. You must have sufficient experience to be confident in the position you take (whether long or short).
Futures trading involves buying or selling forward contracts on stock indices, shares, currencies, commodities, cryptocurrencies, and other assets. These are actual contracts to buy or sell products. They allow you to buy or sell goods or services at a price and date set in advance.
CFD trading, on the other hand, corresponds to buying and selling “contracts for difference.” Like futures contracts, they allow you to exchange the price difference of any digital asset between the moment the contract is signed and when it closes.
The main difference between futures trading and CFD trading lies in their expiration dates. Unlike futures contracts, CFDs don’t have predetermined expiry dates, so you decide when to close the contract.
Additionally, futures trading takes place exclusively on exchanges, whereas CFDs are traded between you and your broker.
The Binance platform is considered one of the best among exchange platforms. However, since August 2, 2022, it has stopped offering futures trading in United States. This is an uncomfortable position for many american traders on the platform.
Indeed, the company is terminating certain activities (futures contracts, dual investment, options, leveraged tokens) due to European legislation. For tax and legal reasons, Binance’s “futures” product poses a particular difficulty in that it is perpetual.
By nature, a contract has a time limit. However, with Binance futures, the contract does not expire and therefore has no term. This means that delivery of the underlying asset never takes place.
This is sufficient for English law not to recognize Binance’s “futures” product as a “contract.”
In this context, it does not strictly comply with the approach of the monetary and financial code. Indeed, the exchange giant has been targeted by regulators worldwide for several years. Binance is therefore forced to adapt its offerings in many countries, particularly across Europe.
There are many platforms that allow futures trading, but we’ve selected one of the most reliable and interesting platforms based on its features and user reviews.
Advantages
Disadvantages
Thanks to the wide diversity of its services and features, Bitget presents itself as one of the best exchange platforms for futures trading in United States.
➡️ Discover our complete tutorial on the subject :
The services provided by Binance remain varied. This is actually one of its strengths, as it allows traders to access a wide range of financial services. The major advantage is that it positions itself as a comprehensive platform for cryptocurrency investment.
Services currently offered by Binance include :
The English term “trading” actually means “exchange.” Trading is very often associated with buying and selling assets to make a profit or incur losses. Via the Binance platform, you can exchange hundreds of different cryptocurrencies with each other.
Binance Earn is a very popular feature in United States. The financial lexicon defines the English expression “earning” as “profit.” The Binance platform offers traders savings accounts and “flexible earning” programs.
These allow users to store cryptocurrencies in this program and earn daily interest. Interest rates can reach up to 10% on stablecoins like USDT or BUSD.
You can withdraw your cryptocurrencies at any time to redirect them to your main wallet. A boon for traders looking for easy and secure investments.
Crypto staking is a more eco-friendly version of the verification consensus (proof of stake). It involves token owners affiliated with “proof of stake” blockchains allowing the control of transactions on these blockchains.
Simply by making their capital entirely available to the blockchain, owners receive cryptocurrency remuneration in return.
Binance’s program allows staking of many cryptocurrencies for a fixed period : 21, 30, 60, 90 days. Traders then receive interest ranging from 1 to 20% of the crypto they stake. These interests depend on the cryptocurrency and the staking duration.
As for farming, it involves investors who pool cryptocurrencies in a liquidity pool. They receive tokens in exchange, usually different from those made available. Of course, Binance also offers its users a farming feature.
A non-fungible token (NFT) is a type of unique digital identifier that, recorded in a blockchain, is impossible to reproduce, substitute, or divide.
It serves to legitimize the authenticity and ownership of an asset that is also digital. Binance has recently opened an NFT category on its platform.
Investors can thus buy NFTs from certain prestigious collections.
As you’ve understood, trading on Binance Futures is a method of trading cryptocurrency futures contracts with leverage, allowing traders to speculate on future price movements of these assets. This option is no longer available in Europe, so how can you continue trading cryptocurrencies on Binance? Here are some solutions that some of you may be able to use.
Margin trading, or margin trading in English, is a trading method that allows traders to borrow funds from their exchange platform to increase their purchasing power.
The margin represents a percentage of the total order value. It’s the initial investment required to initiate a margin trade. It’s closely related to the concept of leverage, which allows traders to control a larger position with a small amount of money.
In other words, margin trading accounts are used to create leveraged trades, where leverage is defined as the ratio between borrowed funds and the invested margin.
For example, a trader wishing to open a $100,000 transaction with 10 :1 leverage will need to commit $10,000 of their capital. Traders must understand that margin trading can involve increased risk due to leverage, and prudent risk management is essential for success.
It’s possible to create a margin trading account via the Binance United States exchange platform to be able to trade with leverage.
You can open a professional account on Binance, which is an interesting option if you want to access Futures trading features. To do this, you need to own a company abroad in a country where Futures are accepted, such as Gibraltar or Dubai in the United Arab Emirates, to name just a few.
To open a professional account on Binance, you’ll first need to provide the necessary documents to verify the legal existence of your company, as well as your personal information and contact details.
Then, you’ll need to provide proof of address and proof of identity, in accordance with Binance’s verification requirements. It’s important to note that verification requirements may vary depending on the jurisdiction where your company is established. Once your professional account is approved, you can start trading on cryptocurrency markets.
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Binance offers a platform that allows you to speculate on the price movements of cryptocurrencies without directly owning them. Traders use futures contracts, which are agreements to exchange an asset at a set price on a future date
Leverage allows you to control a larger position with less capital. For example, with 10x leverage, you can open a position worth €1,000 with only €100 of your own capital. Binance Futures offers leverage up to 125x on certain contracts.
The primary risk is liquidation : if the market moves against your position, especially with high leverage, your position may be automatically closed to cover losses. The high volatility of cryptocurrencies amplifies both potential gains and losses.
You first need to have a Binance account and activate your Futures account. Then, you need to transfer funds (typically stablecoins like USDT) from your main wallet (Spot) to your Futures wallet to start trading.
No, since 2022, Binance has stopped offering futures trading for users in Europe due to local legislation. However, alternatives such as margin trading are still available on the platform
DISCLAIMER
This article is for informational purposes only and should not be considered as investment advice. Trading cryptocurrencies involves risks, and it is important not to invest more than you can afford to lose.
InvestX is not responsible for the quality of the products or services presented on this page and cannot be held liable, directly or indirectly, for any damage or loss caused by the use of any product or service featured in this article. Investments in crypto assets are inherently risky; readers should conduct their own research before taking any action and invest only within their financial means. This article does not constitute investment advice.
Risk Warning : Trading financial instruments and/or cryptocurrencies carries a high level of risk, including the possibility of losing all or part of your investment. It may not be suitable for all investors. Cryptocurrency prices are highly volatile and can be influenced by external factors such as financial, regulatory, or political events. Margin trading increases financial risks.
CFDs (Contracts for Difference) are complex instruments with a high risk of rapid capital loss due to leverage. Between 74% and 89% of retail investor accounts lose money when trading CFDs. You should assess whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Before engaging in financial or cryptocurrency trading, you must be fully informed about the associated risks and fees, carefully evaluate your investment objectives, level of experience, and risk tolerance, and seek professional advice if needed. InvestX.fr and the InvestX application may provide general market commentary, which does not constitute investment advice and should not be interpreted as such. Please consult an independent financial advisor for any investment-related questions. InvestX.fr disclaims any liability for errors, misinvestments, inaccuracies, or omissions and does not guarantee the accuracy or completeness of the information, texts, graphics, links, or other materials provided.
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