Trading Gold & Silver on Binance Futures: A Beginner’s Guide to XAUUSDT and XAGUSDT

Binance Futures brings gold and silver into the world of crypto trading. If you used to think that the threshold for precious metal futures was high and trading hours were limited, you can now use USDT to directly trade the two perpetual contracts XAUUSDT and XAGUSDT. They track the real-time price of gold and silver, but the settlement is in USDT, and you don’t need to actually store gold or silver bars.

Both contracts are cash-settled, which means that any profit or loss you make will be reflected in your USDT balance. If you want to buy up, go long, and if you want to buy down, go short. The logic is the same as the cryptocurrency perpetual contract. The difference is that the underlying asset becomes a traditional safe-haven asset.

Traditional commodity markets have opening and closing times and are closed on weekends. If major political or economic news breaks on Saturday, traditional traders will have to wait until Monday morning to take action. Binance is different here, the market is open 24 hours a day, 365 days a year. Even if the news comes out at 3 a.m. on a Sunday morning, you can react immediately.

The threshold is also much lower. A traditional gold futures contract often costs several thousand dollars to open, making it difficult for ordinary people to participate. Binance Futures allows you to trade fractions of an ounce and get started with very little capital. Leverage can also magnify your exposure, for example with 10x leverage, a margin of around $1,000 would control $10,000 worth of gold contracts. However, leverage is a double-edged sword, as will be discussed in detail later.

Because it is a perpetual contract with no expiration date, a funding rate mechanism is needed to keep the contract price close to the spot price. The funding rate, which swaps between longs and shorts every few hours, is not the fee charged by the exchange. If the funding rate is positive, longs pay shorts; if it is negative, shorts pay longs. Under certain market sentiments, holding positions in a specific direction may receive funding fees, equivalent to passive income. But this is not guaranteed, and the opposite will happen if the market changes direction.

Risks must be clearly explained. Leverage will amplify losses. When using 20 times leverage, as long as the price of gold drops by 5%, you may lose all your principal and trigger forced liquidation. Gold itself is not very volatile, but the crypto derivatives market can be very volatile at times. Therefore, these clichés of stop loss orders, controlling position size, and not using too high leverage are actually very practical.

How to trade specifically? First log in to your Binance account, go to the contract page, and select the USD(S)-M contract. Search for XAUUSDT or XAGUSDT, or find it in the TradFi category. If the account balance is zero, you can use the transfer, currency purchase or flash exchange functions to deposit funds. The first time you use a contract, you need to open a contract account, and you may also need to take a test. The order panel is at the bottom of the page, and buying and selling is very straightforward.

There are two types of margin modes: full position and isolated position. In the cross position mode, all assets and positions in your contract account will be calculated together with the margin and liquidation price, and different assets will affect each other. For example, your gold position may be liquidated due to losses in your silver position, even if they are different trading pairs. The isolated position model isolates risks in a single position, and if a certain position explodes, other positions will not be affected. Newbies are advised to use isolated positions first to control risks within their own acceptable range.

A final reminder: Trading these contracts does not mean you own physical gold or silver, you are simply trading price exposure. All profits and losses are settled in USDT, with no storage, insurance or logistics hassles. However, leverage and volatility still exist, so don’t regard precious metals as a sure-fire way to make money without losing money.

Reference: Binance Academy Original link: https://www.binance.com/en/academy/articles/how-to-trade-gold-and-silver-on-binance-futures

Transaction fees, VIP levels and rebate conditions may change, please refer to the exchange account page and CoinRebate's latest rate page. This article is for educational purposes only and does not constitute investment advice.