Bitcoin long tutorial, short tutorial, and perpetual contract gameplay tutorial (taking Binance as an example)

In the cryptocurrency market, traders can make profits by going long and short. Whether it is long or short, perpetual contracts are a common trading tool. This article will take Binance as an example to introduce in detail the tutorial on long and shorting of Bitcoin, as well as the gameplay of perpetual contracts.

What is long and short

Long refers to the trader expects the asset price to rise, so he buys at a low level and sells at a high level to make a profit. On the contrary, short selling is when traders expect asset prices to fall, so they sell at high levels and buy at low levels to make profits.

How to Long Bitcoin on Binance

To long Bitcoin on Binance, traders need to follow these steps:

• Log in to the Binance Account : First, make sure you have registered and logged into the Binance Account.
• Go to the perpetual contract page : On the Binance homepage, click the “Derivatives” menu and select “Perpetual Contract”.
• Select Bitcoin Contract : On the Perpetual Contract page, find and select the Bitcoin (BTC) contract.
• Set leverage : Choose the right leverage multiple based on your risk tolerance. The higher the leverage, the greater the potential returns and risks.
• Place an order long : On the order page, select "Buy/Long", enter the quantity and price you want to trade, and then click the "Buy" button.

How to Short Bitcoin on Binance

The steps to short Bitcoin are similar to going long, but it should be noted that you operate when the price is expected to fall. The specific steps are as follows:

• Log in to the Binance Account : Make sure you have registered and logged into the Binance Account.
• Go to the perpetual contract page : On the Binance homepage, click the “Derivatives” menu and select “Perpetual Contract”.
• Select Bitcoin Contract : On the Perpetual Contract page, find and select the Bitcoin (BTC) contract.
• Set leverage : Choose the right leverage multiple based on your risk tolerance.
• Place an order and short : On the order page, select "Sell/Short", enter the quantity and price you want to trade, and then click the "Sell" button.

The basic concept of perpetual contract

A perpetual contract is a derivative contract without an expiration date that allows traders to trade without actually owning assets. Here are some key concepts:

• Leverage : Perpetual contracts allow traders to use leverage, which means you can control larger positions with less money.
• Funding fees : Positioners of perpetual contracts are required to pay or charge funds, depending on the long-short balance of the market.
• Tag Price : To prevent market manipulation, Binance uses tag prices to calculate unrealized profits and losses.

How to manage the risk of a perpetual contract

Risk management is crucial when trading perpetual contracts. Here are some effective risk management strategies:

• Set Stop Loss : Set the stop loss price when placing an order to limit potential losses.
• Use leverage reasonably : Avoid using too high leverage to reduce the risk of liquidation.
• Diversified investment : Do not invest all funds into a single contract. Appropriate diversification of investment can reduce risks.

How to trade perpetual contracts on Binance

The following are the detailed perpetual contract trading steps:

• Log in to the Binance Account : Make sure you have registered and logged into the Binance Account.
• Go to the perpetual contract page : On the Binance homepage, click the “Derivatives” menu and select “Perpetual Contract”.
• Select a contract : On the Perpetual Contract page, select the contract you want to trade, such as Bitcoin (BTC) contract.
• Set leverage : Choose the right leverage multiple based on your risk tolerance.
• Place an order : On the order page, select "Buy/Long" or "Sell/Short", enter the quantity and price you want to trade, and then click the corresponding button.
• Monitoring and management : After placing an order, closely monitor the market conditions and adjust or close positions as needed.

FAQ

What is the funding fee?

Funding fees are a unique mechanism for perpetual contracts, which are used to ensure that the contract price is consistent with the spot price. Traders holding long positions will be charged the funds, while traders holding short positions will receive the funds. Payment and collection of funds are usually done every 8 hours.

How to calculate the mark price?

The tag price is the price Binance uses to calculate unrealized profits and losses to prevent market manipulation. The mark price is usually calculated based on the weighted average of the spot price and the contract price. The specific formula is: mark price = spot index price* (1 ± basis factor).

What is a liquidation?

A liquidation refers to the system automatically closing the position to prevent further losses when the trader’s margin is not enough to maintain the current position. Filing positions usually occurs when the market fluctuates violently. Traders should use leverage reasonably and set stop loss to avoid firing positions.

How to choose the right leverage multiple?

Choosing the right leverage multiple depends on the trader's risk tolerance and market conditions. Generally speaking, the higher the leverage multiple, the greater the potential returns and risks. Newbie traders recommend starting with low leverage, gradually increasing the leverage multiple, and always maintaining reasonable risk management.

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