07/11/2021
How to make money trading Binance Futures in Nigeria: The Technical Perspective
DISCLAIMER!
This article does not guarantee that you will make money trading Binance Futures. Every knowledge shared here should not be considered a financial advice but purely for educational purposes. The objective of this article is to properly educate you on how to make money trading Binance Futures.
I find hope when I wake up every morning with news that someone made a fortune just by trading cryptocurrency on Binance. Nothing could be more exhilarating and fulfilling than hearing a story of how nobody became somebody just by taking a long position on a trade. That is the kind of hope Binance have given to a lot of young people like me in Nigeria and my goal in this article is to share that hope across the world to as many people that desperately need it.
I hope this article gives more hope and opportunity to the hopeless. I hope after reading this article, you will get to see the glaring possibility to make a life changing generational wealth on Binance if you believe and ready to act on what you know.
Binance has become a household name in Nigeria and the world at large owing largely to its unprecedented market pe*******on in the global cryptocurrency exchange industry and its laudable success in fulfilling one of its core mandates of democratizing access to trading crypto futures since its debut in 2017.
Thanks to the introduction of Binance Futures trading on the exchange, it is now possible to sit at one corner of a living room anywhere in the world and be able to place a cryptocurrency long trade without actually owning the cryptocurrency. How easy and convenient trading can get with Binance, right?
In an underdeveloped economy like Nigeria where abject poverty is a harsh reality, unemployment rate is at its all time high, and Naira (its local currency) continues on a free fall, young people see Binance as a messiah that can rescue them from the economic conundrum they found themselves due to fault not of their own and maybe find some hope in the opportunities that the platform presents.
Let me guess, by now the question on your mind would be, enough of cheap talk. How can I make money trading Binance Futures? So let’s get right into it.
The first thing we need to understand is the meaning of Binance Futures. After all, you cannot make money in something you know little or nothing about. To understand the meaning of Binance Futures, we need to know what futures trading itself means. Futures trading is the exchange or trading of one asset against another without actually owning those assets.
To bring this into perspective, we can therefore say Binance Futures trading is a type of trading that allows you to buy and sell cryptocurrency against each other without having to hold or own cryptocurrency. The way to make money on Binance Futures is to go long or buy low when you believe the price of the asset would go up so you can sell high. Or go short when you believe the price of the asset would go down so you can buy low.
At this juncture, the apparent question to ask is, how then do you know when to buy or sell? How do you know when to long or short a trade? These are technical questions that can mainly be answered using technical analysis. But to try to answer the question in a simple way, you buy when there is a support level to trade from and sell when there is a resistance level to trade from. Does that sound like am speaking gibberish? Not to worry, you will catch up soon enough.
How to identify strong support and resistance levels?
This is where the knowledge of price action and volume profile strategies become very important. To identify strong supports and resistance levels, these three price action and volume based setups come in handy:
Before I talk about the setups, let me quickly explain what volume profile means and why it is one of the most reliable indicators out there and the closest to Holy Grail you can get.
Volume profile is an advanced trading indicator that is calculated using volume at price and presented in histogram. It horizontally shows the traded volume of an asset at a particular price level over a period of time.
The main reason why volume profile is more reliable and effective than other standard indicators out there is because it is calculated using three variables as against two variables used in other indicators.
Volume profile is calculated using price, volume and time. While standard indicators use price and time variables only. This is a huge difference in the light of the fact that volume profile provides volume at price information which is a solid edge in itself if used properly.
Now, back to how to identify strong support and resistance levels at any time frame and in any given market. Here are three highly back tested and high probability trade setups I love to use for Binance Futures trading:
Volume Accumulation Setup
There are three phases to this setup which include:
Phase l: Accumulation phase:
This stage is usually characterized by sideways price action or rotation along the price channel. It is assumed that when the big institutions want to take positions, they don’t do it once. They do it slowly and unnoticeably in a price channel so as not to alert other market participants about their intentions.
So when the market is in a sideways price action mode, the idea is that the big guys are taking positions with the intention to manipulate the market and start a new trend. But this does not mean we should read meaning to every rotation on the chart. Another condition which is the second phase must be met.
Note however that to know whether truly the market participants have accumulated positions in a price channel, the volume profile indicator is placed around the price channel to see the extent of the volume of positions traded.
Phase ll: Aggressive Trend
As much of critical information the first phase gave us, one thing that is missing is that we do not know the intention of the big guys. Granted, we know they are accumulating positions and getting set to start a trend. What we don’t know however is whether the trend is to the upside or downside and whether they are stocking up buying or selling positions.
It is in this phase that this information will be provided and we will know truly whether the big institutions were buying aggressively or selling aggressively in the price channel. When we see an aggressive uptrend after a sideways price action, that tells us that the big guys were taking long positions which makes them aggressive buyers. Contrarily, however, when we see an aggressive downtrend after a consolidation phase, that gives us the information that the big guys were selling aggressively as they were taking short positions during the consolidation stage.
Phase lll: Trade with the big guys
In this phase, we already know what the intentions of the big guys are. Now that we already know their intention, the next logical thing to do is to trade with them. How then can we trade with them? By waiting for pull back to the volume based support or resistance level.
For instance, if the big guys move the price upward, you wait for pull back to the support level and go long when the price return to the volume based support level where the big institutional buyers accumulated most of their positions (called the Point of Control) and vice versa.
Trend Setup
Here are the phases to this setup:
Phase l: Trend Market
For this setup to work, the market must be in a trend. Whether we are in an uptrend or a downtrend, it doesn’t matter. What matters is that there is a clear trend in the market.
Phase ll: Identify a volume cluster
After identifying that there is a clear and aggressive trend in the market, the next line of action is to place the volume profile tool around the trend area to identify volume cluster areas which tell us where the big guys added more to their positions as they were moving the price in a particular direction.
Phase lll: Trade in the direction of the trend
As the saying goes, “the trend is your friend”.
This is so true in this case. Go long when the market is in an uptrend. Go short when the market is in a downtrend. But like other setups, you have to wait for pull back to the volume cluster support or resistance levels before you enter your trade.
Rejection Setup
This is the last setup on how to trade Binance Futures using volume profile indicator and these are the steps to follow:
Phase l: Identify an aggressive buying or selling activity
Here, you are looking for a strong buying or selling activity in a trending or range-bound market. In most cases, we see rejection setup in a consolidation or range-bound market.
Phase ll: Identify a sudden and quick retracement
After confirming a buying or selling activity is in play, the next thing is to look for a sudden or sharp retracement. This gives the information of a sudden reversal in trend and that some set of market participants have overpowered other participants. In most cases, this sudden reversal is characterized by a long wick at the bottom of the rejection zone.
Phase lV: Allow the market to settle
This is the final confirmation of this setup. After confirming that the reversal had played out as expected, the final confirmation is to allow the market to settle and accept the current fair prices. What this means is that, after the rejection setup had played out, you want to see some sideways price action around the rejection zone, not a sudden price retracement again.
To demonstrate this, let’s consider that there is a strong buying activity and the buyers appear to be in control. Suddenly, there was a sharp retracement. Massive sell-off happened and the sellers took over immediately.
For us to confirm truly that a rejection setup has been formed in this case, we don’t want to see a sudden buying activity again. We want to see the market settle for the current fair prices and accept lower prices. This shows us truly that the sellers have taken over.
Phase lll: Position your volume profile around the wick of the rejection zone
Now that you have the price action confirmation, you also need the volume profile confirmation. To do this, place the volume profile around the wick or bottom of the rejection zone to identify volume peaks. These volume peaks show the amount of volumes traded in the rejection area. The thicker the volume, the stronger the level.
Phase V: Wait for pull back and enter your trade
Now that you have both price action and volume profile confirmations, the next thing is to wait for the price to return back to the volume peaks where the market turned and enter your trade.
You go long if it was the lower prices that were rejected just like the above example and short if it was the higher prices that were rejected.
These setups work pretty well especially if you execute them hook, line and sinker and in combination with candlestick reversal patterns. But I’m not promising that you will be profitable immediately but with deliberate practice, there’s no limit to what you can achieve with them.
To conclude, the beauty of volume profile combined with price action is that they can be used in any time frame whether 5 minutes chart or daily or even monthly chart, it doesn’t make any difference. Yes, they are that good. Furthermore, another thing I find interesting about the strategies is its versatility as it can work in any market be it on the Binance Futures market, Forex market or even the Stock market, it doesn’t matter.
Disclosure: You can access the volume profile indicator for free on the Ninja trading platform or Tradingview platform. I do not own or sell any trading system. Thanks!
Regards,
Trader Tim
