Earn money at Binance with spread trading of futures contracts
For those of us who participate in the crypto community, trading is something we are used to. Being this one of the favorite investment mechanisms for crypto currency users. In this sense, future contracts on assets such as Bitcoin, would be one more tool to generate profits by investing in the crypto market. Therefore, today we explain how to make money in Binance with the spread trading of futures contracts.
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What is spread trading?
First of all, we should start by explaining what spread trading in Bitcoin futures contracts is, and how to use it to generate profits at Binance Futures. It’s an investment strategy that takes advantage of the particular characteristics of futures contracts. In this way, you can make a profit on the different expiration dates of the contracts.
Thus, as future contracts are commitments to buy or sell a certain amount of Bitcoins on a certain date. This makes it possible to buy or sell futures with different dates and prices. You can therefore buy a future contract that expires in August, at the same time that you buy one that expires in November.
This generates a price differential between the two contracts, as each will have a different value. The August future contract can be quoted at any given time for $9,400. While the November contract can be placed at $9,500. This translates into a loss of $100 for the investor.
But if, on the other hand, the price of the August contract rises to $9,600 while the November contract remains at $9,500, the investor would now see a profit of $100. So the key to profit from spread trading within Binance, is the simultaneous purchase and sale of two contracts whose price differential is favorable to us.
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Why use this strategy at Binance?
Now, if spread trading seems to be a relatively simple strategy, we still need to understand why use it to generate profits from our investments. After all, buying and selling Bitcoin and futures contracts is not enough? And in this respect the spread trading with Binance Futures has several advantages.
Thanks to this strategy, it won’t matter which direction the market goes, but rather what the spread between your contracts is, making you somewhat independent of the development of Bitcoin. Because even in times of high volatility, the price of contracts usually changes in unison. In addition, the leverage in buying future contracts, along with low transaction costs, means that this strategy is available to any retail trader.
Of course, this does not mean that there are no risks involved in using the spread trading on platforms like Binance. The very fact that futures are highly leveraged products means that potential losses from spread trading are multiplied. This is without taking into account other factors inherent to the futures market such as a possible lack of liquidity in the market.
However, at the end of the day these risks are not much greater than those faced by traders in their daily trading. So, when you look at it in perspective, spread trading at Binance Futures seems to be one of the best strategies to consider for making money investing in cryptosystems.