Haven't really traded in a very long time but I reckon things still work similar as it used to back then. I'm not the best trader either, when it comes to spot I usually sell when I feel like it pumps too fast and most of the time buy back in too early just cause "hey I got more hive than I had a couple hours ago" rather than waiting to 1.5x it I'm okay with 20% more hive on smaller trades.
So a simple explanation, because honestly I wouldn't even be able to give you a more technical one cause there's probably many things I don't understand fully with futures, binance does however have a lot of trading data and other tools to delve into before or like I used to do, mid-trade, to convince myself to keep it running over the night.
Basically you move funds into a designated futures wallet, you can either pick one where u trade coins against usdt or keep them as the coins they are, for instance bitcoin and still trade against usdt (or against other coins like btc-eth pairs). Once the usdt are in that wallet they are separated from your other funds, meaning you can't lose more than what you've transferred over, however you can transfer more over to attempt to save yourself from those dreaded liquidation email alerts either letting you know you're close to getting rekt or you already are.
Okay so let's say you see hive at $1 for simplicity's sake and you have $1000 in the wallet and think it will go up from this moment forward or eventually without going too low. Without getting crazy, you want to try a 10x margin where you borrow 10x the amount you have to open a trade for hive to go up/long. Naturally for every trade there has to be a counter trade, someone shorting or at some point having shorted hive by opening a position betting on it going lower in the near future. Looking at the funding rate of coins on the futures page, there is a timed cost to leaving positions open/paying interest on the loans you've taken. I'm not entirely sure how much of the loans are provided by the exchange and how much comes from those taking the opposite trade of yours but there's usually a default funding rate traders have to pay every 4-8h (for hive it seems to be 4h according to the announcement linked in the post), the default fee is 0.01% which means that those longing will pay those shorting. Again, not 100% sure if part of that goes to the exchange or if the fee that occurrs when you open the trade is the only one binance gets, but you can basically also earn some fees by having a position open if you are in the minority side of the trade. Now these fees aren't big but you gotta remember that you're paying for what the position is worth, not just from your initial $1000, same goes for when you open the trade.
If binance's trading fees are still 0.075% as I remember and you open a 10x long with your 1k this means you're already off the gate down $7.5 and another $7.5 when you decide to close it so you're going to want the price to change by at least 0.15% in your favor to even break even on a trade, not counting funding fee. There may however be lower fees based on how you execute the trade, if you "market buy" meaning you buy into an existing sell order or short you're going to pay a premium on the fee than if you had placed a buy order at say $0.999 and waited for price to get there so someone would short into your long/sell into your buy order.
Okay now in terms of profits/wreckening you have a lot of flexibility on futures. For instance you can change the x loan amount at any time but it'll be applied based on your initial wallet holdings. For instance say you went long hive on $1 at 10x with 1000$, this now means that your trade is active as if you have 10,000$ in the position. If hive goes from $1 to $2, congrats, you made a profit of 10,000$. The downside is that if Hive drops you have a lot less room for error because once your unrealised profit gets close to -$1000 your whole position will be force closed so you can pay back the $9000 you borrowed for your 10x $1000 loan. In this example this means if hive drops from 1 to 0.90$ it's game over, you'll most likely be left with 100$ or so depending on how volatile/wild the swing was when the forced liquidation trade occurred. Binance usually sends you a warning email when you're closing in on the liquidation price (I believe it's 80%, I.e. 0.92$ in this example)
If this alert were to wake you up and you're not like me who sleeps 8h not even waking up to an airplane having crashed into your neighborhood then you have the option to "panic" and send more usd over to the futures wallet, if you were to send another 1000$ in this case your liquidation hive price target would go from 90c to 80c giving you some extra room for error but of course at double to cost (if it does reach 80c you'll lose ~1800$ instead of just ~900)
The flexibility then comes in where if you suddenly got some insider trading telling you someone's going to implement X on the hive blockchain and it's only up from here or you just feel like it's not going to go lower than 90c you can use part of the 1000$ you added extra to buy/long more hive. You can also change the margin multiplier from 10x to apparently 75x (crazy stuff) but keep in mind that the current unrealised minus profit will eat into the additional 1000$ you added so you can't buy/borrow another 10k to turn your 10k hive long into 20k. If the price here is still 90c and your 1k saved you from liquidation you most likely have no "extra" funds to long hive more with which would adjust your entry price based on how much more you buy. Okay that was a long and confusing sentence, let's assume you have a lot more usd and you transfer some more over to keep things simple. If at 90c you decide to buy another $10k worth of hive with 1000$ at 10x, your initial $1 entry price would drop to 0.95$, this means that if you were right and hive didn't drop further but started going up instead you'll start being in profit once it passes 95c rather than $1.
Anyway for beginners I'd encourage to start very, very small. Always leave room for at least 3-4 "double downs" in terms of adding more balance to your futures wallet if things don't go your way and to never let the liquidity price be too high as it may cause a lot of stress. I didn't even go into stop losses or orders here, they can some times be nice while other times ruin great opportunities (you buy at $1 and place a stoploss at 98c so you'd only lose 200$ in the above example and not ~900 in case hive decides to drop under 90c while you're afk/sleeping, but you wake up and notice that not only did you lose 200$ and your position, but hive only dropped to exactly 98c taking you out and is now at 5$ which could've meant 50k profit from your initial 1k balance).
Other readers feel free to correct me on stuff I wasn't 100% true about, this just from an amateur who thought he could make a lot more hive some years ago but decided he could spend his time on building stuff instead and only ever longed which wasn't a great idea considering the 4 year cycles.
Funding fees go to those who are participating in the "Earn" project, locking their assets for a certain period of time to be precise. It works similarly to how a bank system works. The exchange is keeping a part obviously but the majority goes to paying yield to those locking their assets for 3 months, 6 months or for a longer period.
Regarding placing orders, you can place a Limit order or a Market order, or both. With Market orders you have to factor in the slippage, which, if price is running hot, can be high. I prefer limit orders, even split orders to DCA my entry and avoid slippage, but for that, you need to know your levels, or price takes off without you.
Choosing trade type can also be tricky as you have 2 options: Isolated and Cross. You need to be sure which one you're comfortable with as Isolated refers only to your position size, while with cross you're guaranteeing with your entire wallet. Bybit has Unified Trading Wallet now, which means you don't have to split your capital between spot and futures, and transfer funds back and forth, which is a huge advantage for me. Binance doesn't have it yet, but this is the future, so I believe it's just a matter of time. Anyway, I prefer Isolated, as when my SL is hit, I know I was wrong and no need to risk more than I want to. I can reassess, look for another trigger and enter again if the market gives me what I need.
Stop loss is a must for me. No SL, no trade, but again, you need to know your levels because otherwise you become a feeder to SL hunters. When scalping on the 1 min time frame, there's no room for errors.
This was a scalp short on SOL on the 1 min time frame, with 3.9 R/R. I try to keep my charts simple, but still, you need to know there to mitigate risk, especially if you're trading on a red folder news day, when volatility and manipulation is high and things can turn against you quickly.
This doesn't mean you can't use leverage. It has its advantages, but ultimately, position size is what counts.
All in all, I've been waiting for $HIVE to be listed as perp futures for a long time and I'm glad it happened.
Thanks for this!
I was in bed already when you added it here :)
I was in bed as I wrote that out on my phone waiting for sleep. :D