The cryptocurrency industry is expanding, and several exchange platforms are available. These platforms have a central role in providing traders with a place to buy, store, or sell crypto assets. As a way to improve functionality, some exchange like Binance has launched their native token.
Binance is arguably the biggest and oldest crypto exchange platform in the cryptocurrency market. BNB is a token launched by Binance in 2017 as an ERC-20 token hosted on the Ethereum platform. However, BNB has been upgraded and transferred to the main BNB chain.
BNB is a utility token within the Binance network that allows traders to get discounts on their trading fees. However, the fees can change depending on the account’s tier level and trading volume. In addition, you can use BNB to pay for flights, book hotels, buy virtual gifts and donate to charity.
Are you interested in learning how to buy and sell BNB? This article will guide you on how to trade BNB on Binance and other exchanges and how to manage risks. Let us dive in!
How to buy BNB on Binance exchange
Since BNB is the native token on the Binance exchange, buying and selling it is quite simple. Here are some steps to buying and selling BNB on Binance:
Step 1: Create an account
The first step is creating an account on Binance.com-the signup process is quite simple. Registration requires your email address, phone number, and Apple or Google account. In addition, you need to provide your name and select country of residence. Once you have successfully verified the code sent to your mail or phone number, your Binance account is active. The next step is to fund your account in USD or other currencies via bank transfers, credit/debit cards, or other cryptocurrencies.
Step 2: Verify your account- the KYC (know your customer) process
This verification is the most critical stage in Binance registration. You need to supply your city name, postal code, and residential address. Then, you need to provide a driver’s license or identity card. Afterward, you are required to do face verification, which must capture your face, so avoid hats or fancy glasses.
Once your account has been verified, you can unlock more deposit/withdrawal options and other features.
Step 3: Find the BNB Market tab
Once you have verified and funded your account, find the BNB Markets tab on Binance to view the BNB trading pairs. Binance offers various BNB trading pairs like BNB/USDT, BNB/BTC, and BNB/USDC that allow you to buy and sell BNB on the exchange.
Step 4: Buy BNB
To purchase BNB, you need to place a market or limit buy order on your chosen trading pair. You can consider buying a stablecoin like USDT and using it to buy BNB. However, it may be easier for new users to buy BNB via credit card, debit card, or bank transfer.
A market order will execute at the current market price of the token. However, a limit buy order will only execute when the price of BNB is at the pre-set value. Once you have bought BNB tokens, your balance will show in your Binance wallet. You can hold it, trade with it or withdraw it.
Step 5: Sell BNB
To sell BNB, Place a market or limit sell order on the BNB trading pair you desire. A market order indicates you want to sell immediately at the market price. On the other hand, a limit sell order allows you to indicate your desired selling price, which will only be executed when the market price reaches the limit price.
Once your sell order has been executed, you can withdraw your funds in USD or other currencies to exit your BNB position.
Trading BNB Using other crypto exchanges
Although BNB is the native token on the Binance exchange, you can purchase them at different fees on other platforms. Global crypto exchanges like Coinbase are a good alternative for buying BNB. They offer various trading pairs, including BNB. However, you need to create an account on the exchange and fund it, just like trading on Binance. Once you have completed the verification, you can explore the available BNB trading pair to place your order.
There are hundreds of exchanges available. Therefore, you must be careful when choosing a trading platform. The importance of research cannot be overstated because you want to find an exchange that supports your country, desired payment method and provides adequate liquidity.
Various payment methods, such as credit cards, debit cards, PayPal, or bank transfers, are available on exchanges. Liquidity is a key factor that must be carefully considered- the ease of buying or selling a crypto asset on an exchange. An exchange with high liquidity indicates that many traders are active on it. Therefore, you can easily buy or sell BNB at your desired price. However, you may need to wait longer to execute your limit order on an exchange with low liquidity.
Other things to consider among exchanges before deciding include fees, security, regulation, and withdrawal limits. Different exchanges have varying trading, withdrawal, and deposit fees. In addition, they may offer discounts on transactions involving the exchange of native coins. Therefore, it is critical to compare the features on various platforms to determine which is best for you.
Many exchanges are not regulated, which could mean hidden transaction fees. Therefore, you need to choose an exchange that is regulated by bodies like the Security and Exchange Commission (SEC), the International Organization of Securities Commissions (IOSCO), and the Cyprus Securities and Exchange Commission (CySEC).
Other options only make sense if volumes/features on Binance do not meet your needs. Other exchanges may offer better fees or features, so research and seek expert opinions to find the best exchange for your trading needs.
Trading BNB CFDs
One method of trading BNB is through Contracts for Difference (CFD). CFD trading allows you to trade on margin- entering a position with a small capital. It offers flexibility, which makes it a great alternative to traditional trading.
BNB CFDs allow exposure to BNB price without owning the actual token. You trade a contract with a broker who pays the difference between the buy and sell price. In other words, you are trading by betting on the price movement of BNB.
You can trade BNB CFDs through regulated brokers like eToro, AvaTrade, Kraken, etc., who can handle the exchange side of the CFD trade. It is critical to prioritize regulated brokers to ensure safe and transparent trading. Look for brokers with tight spreads, flexible leverage, and risk management tools.
Leverage is a significant feature of trading BNB CFDs, meaning you can amplify gains (and losses). Leveraging can be double-edged, as you can amplify your gains or losses if the market moves against you. Therefore, it is easy to open small accounts to start with limited capital. However, it would be best to implement appropriate trading mechanisms and risk-mitigation tools when using leverage.
In addition, you can go long or short because most do not have expiry unless held long term. Suppose you predict an increase in BNB’s price; you can go long and profit from the increasing market value. On the other hand, if you think the price is crashing, you can go short to make a profit. Therefore, BNB CFD trading offers more flexibility to your trading plan and strategy.
Furthermore, creating a demo account may be a good strategy for understanding how the trade works. Demo accounts allow you to practice, make mistakes, and implement potential strategies without risking your capital. Trading with a demo account can boost confidence and help you re-evaluate your appetite for risk before trading.
Risks are associated with crypto assets, and BNB’s volatility makes you open to them. Sudden and drastic price movements mean losses can spiral out of control quickly. Therefore, it is critical to have a tested and trusted trading plan and risk management strategy before entering a BNB CFD trade.
How to manage risks when buying/selling BNB
Binance coin is gaining popularity thanks to its use on the Binance exchange- widely recognized as a reputable platform. Like any crypto trading, there are risks associated with buying and selling BNB.
Here are some tips to help you manage risks when buying or selling BNB.
1. Only risk 1-5% of capital in any one BNB trade
The first tip in trading cryptocurrency due to the high volatility is to avoid putting money you cannot afford to lose. The volatile nature of BNB can cause significant price movement in a short time. Therefore, you can lose all your investments or make huge profits in a couple of hours.
A good rule is to risk only 1-5% of capital in any BNB trade due to the volatility. In addition, it is advisable to diversify across your portfolio to reduce risk concentration on one crypto asset. Investing in various crypto assets can help maximize profit and protect you from an asset's sudden unfavorable price movement.
2. For BNB CFDs, be wary of excessive leverage
Trading BNB CFDs comes with the potential to make huge profits or losses. Therefore, it is critical to be careful about using excessive leverage for a trade. Too much leverage is one of the avoidable pitfalls in BNB CFD trading. Starting with lower levels, like 2-5x, is advisable to get used to trading while capping loss potential.
In addition, you should never use less than 1:2 leverage/margin to ensure you have enough funds if the price trend does not favor you. This is one of the principles of trading leverage that can help you minimize losses.
3. Use stop-loss orders to limit downside risk
Another critical tip for managing risk when trading BNB is to use stop-loss orders. A stop-loss order can limit downside risk when your market movement predictions are incorrect. This is an essential tip, especially for short-term trades with high volatility.
The stop-loss order is like an insurance policy, but you do not need to pay more to implement it. In addition, it protects you from emotional trading and helps to lock in profits. Therefore, when you reach your stop-loss price, it becomes a market order, which will be executed.
However, you should give some room for volatility and trail stops. In other words, avoid setting a stop-loss order at a particular level. Instead, practice some flexibility by adjusting it based on the market movement. As a result, you can maximize your gains while reducing your risk.
4. Stay updated on current news and announcement
The volatility of BNB is influenced by news and announcement of major events. Therefore, staying updated on current news is critical as it may significantly affect BNB’s price. For example, negative news may cause a crash in BNB’s price, which can cause significant losses if you are not careful. However, when you stay abreast of news, you can be ready to close positions quickly if something unexpected occurs.
5. Aim to accumulate on dips
Another crucial tip to consider when trading BNB is taking profits at key inflation points. These points are a high possibility of a price downtrend when BNB has reached an appreciable high. Taking profits at these points can help protect profit and avoid giving everything back on a down-swing
In addition, aim to accumulate on dips by buying BNB when the price is very low. “Buy the dip” is a common term in crypto trading where people are encouraged to buy assets when their price is very low. This is an excellent strategy where traders buy BNB at a low price and sell it when the rise increases. However, you may need patience as the price may take a while before rising.
6. Conduct research before trading BNB
Before you trade or buy BNB, thoroughly research it and understand the potential risks. Due to the highly volatile nature of BNB, it is better suited for short-term speculation. On the other hand, long-term speculation may be more challenging and risky. Therefore, you must gather adequate information before buying and selling BNB.
7. Choose a reputable and regulated broker
Lastly, choosing a reputable broker when trading BNB CFDs is essential. Although trading BNB CFDs can be highly profitable, it comes with similar risks. Therefore, starting with a demo account is best to get familiar with their platform before using your capital. VSTAR is a reliable and regulated broker that offers competitive fees and a demo account.
Another way to ascertain the reliability of brokers is to check credentials and reviews to ensure they provide excellent services.
Conclusion
Binance is a global exchange platform that offers various assets, but its native token as BNB (Binance coin). You can also buy/sell BNB on other global exchanges like Coinbase. BNB has many use cases, including making payments, booking hotels, charity, and many more.
When spot trading does not meet your trading needs, CFD may be the right trading method for you. However, before trading CFDs, you should consider policies, regulations and restrictions in your area to find the best broker.
VSTAR is regulated by the Cyprus Securities and Exchange Commission and operates under the framework of Directive 2014/65/EU (MiFiD II), which is applicable in most parts of the world, and this is the first step to CFD trading.
Finally, risk management is a critical aspect of trading BNB. Follow the tips in this guide with a solid trading plan to maximize profit and reduce risk.
