Do you want to survive in the volatile crypto market? It's not just about leverage, but the fundamentals! Here are 3 concepts you need to master to maximize efficiency and manage risks in your trades on Binance:
1. Mastering Position Sizing: the lot in the world of crypto
What is it? In crypto, we don't use the term "lot" in the traditional sense, but focus on "position size" (the amount of currency you buy/sell).
Why is it important? Your position size should reflect the level of risk you are taking on a single trade (usually between 1% to 3% of your total capital).
Binance Tip: When using Futures, ensure that you specify the number of contracts/units that correspond to your stop loss. A larger position size with a tight stop loss may be less risky than a small size with a wide stop loss. The goal is to stabilize risk.
2. Understanding the cost of the trade: the spread and trading fees
The spread in crypto: is the difference between the highest available bid price and the lowest available ask price in the order book. The lower the liquidity, the greater this spread.
The true cost on Binance: the trading cost includes this spread (especially during times of volatility), plus Maker and Taker fees.
Binance Tip: Use Limit Orders whenever possible instead of Market Orders to become a Maker, which reduces trading fees in most cases and ensures execution at the price you set.
3. Trading like professionals: limit and stop orders
Use pending orders to automate your strategy and not miss opportunities:
Limit Orders: to enter the market at better prices than it currently is.
Buy Limit: to buy at a lower price. Ideal for buying from support areas.
Sell Limit: to sell at a higher price. Ideal for taking profits at resistance areas.
Stop Orders: to ensure execution when breaking through key levels.
Buy Stop: to buy at a higher price, to enter in case of confirmed positive breakout.
Sell Stop: to sell at a lower price, to enter in case of confirmed negative breakout.
Never trade without placing a Stop Loss to protect your capital from sudden volatility. You can also use a Trailing Stop on your profitable trades to automatically secure profits as the price rises.
