Hello, and welcome to this tutorial dedicated to Binance Futures – USDT-Ⓜ Futures Contracts, one of the most widely used and diversified derivative exchanges (platform for trading cryptocurrency with leverage) in the market. I will explain to you step by step how to register on this platform? How to use leverage? How to use different orders? But also how to avoid being liquidated?
Launched in September 2019, Binance Futures is a futures trading platform that allows traders to use leverage (up to x125) and open long and short positions with a variety of cryptocurrencies.
💡 If you’re a novice, I suggest you start by reading the article Binance Tutorial. You might want to start from there and avoid leverage trading in a first place.
Leverage Trading involves a risk of loss. Please consider carefully if such trading is appropriate for you. Past performance is not indicative of future results. Articles and content on this website are for entertainment purposes only and do not constitute investment recommendations or advice.
- Binance Futures, the leader in futures contracts
- How do I open an account at Binance Futures?
- The Binance Futures interface
- Transfer funds to your Binance Futures account
- Adjusting your leverage
- Differences Between Spot Trading and Futures Trading
- The Different Fees in Futures Trading
- Available orders and their use
- What is Post-Only, Time in Force, and Reduce-Only?
- Types of Position Mode
- How do I use the Binance Futures calculator?
- When are your positions likely to be liquidated?
- Binance Futures Notes and Review
Binance Futures, the leader in futures contracts
Overall, this platform strongly resembles Binance’s spot exchange platform. For users, the experience is just as fluid, and the execution of transactions is relatively intuitive.
Since its deployment, Binance Futures has quickly established itself as one of the leading futures trading platforms. In just 7 months, Binance Futures has become the most widely used platform on the market, ahead of Huobi, OKEx, and BitMEX.
However, the latter is not for everyone and will generally be reserved for traders who already have knowledge in the field and good risk management.
💡 Although leverage may seem like a good way to make significant gains, keep in mind that the risks involved are significant. Liquidations can be almost instantaneous if the leverage chosen is too high or if your strategy is not suitable.
For these reasons, I will explain to you step by step how this platform works while detailing the different aspects of such trading.
If you are not familiar with leverage, please feel free to discover how it works and its potential risks through this course.
How do I open an account at Binance Futures?
Before opening a Binance Futures account, you must have a regular Binance account. If you do not have one, you can consult our tutorial on the subject.
I strongly recommend that you consult this tutorial if you are not familiar with the use of Binance. It is necessary to know how the basic platform works if you want to understand the full functionality of Binance Futures.
If you already have an account, click on the button below to access Binance Futures.
10% discount on your trading fees with the code novablocks
Now that you are on the platform, go to the bottom right and click on Open Now.
The Binance Futures Interface
Once your account is activated, you now have access to all the features of Binance Futures and its interface. Let’s look at how this interface is made up and how it differs from Binance Spot.
At the very top is the Binance Futures menu. It allows you to access USDT futures, COIN Futures, Information such as Guides and Funding-Rates, Access to API, Spot Exchange, discover Activities such as Battle and Leaderboard, and access the referral program through the Earn Bonus Button :
Just below, you can find a lot of information related to the pair you have previously selected, here BTC/USDT.
This is where you can :
- Choose the contract you wish to negotiate.
- Consult its price.
- Change the Margin mode between Cross and Isolated, and the leverage.
- Consult the latest market price of the contract. This is the price used to calculate profit and loss. It may differ from the live price to avoid manipulation.
- Consult the Rate of the next funding between buyers and the sellers.
- Consult various other market data, such as variations and volume over the last 24 hours.
To change the contract, click on BTCUSDT and choose the one you are interested in:
Compared to the competition, Binance Futures offers you futures contracts for a significant number of cryptocurrencies. These include ETH, BCH, XRP, EOS, LTC, TRX, ETC, LINK, XLM, ADA, XMR, DASH, ZEC, XTZ, BNB, ATOM, ONT, IOTA, BAT, VET, NEO, QTUM, IOST.
Below, you will find the chart for the selected contract. You have the possibility to change the unit of time (minutes, hours, days, etc.), to add indicators (MACD, volume, etc.), and to use several drawing tools for technical analysis: trend lines, supports/resistances, etc …
I recommend you to chose the TradingView option if you are used to TradingView drawing tools.
On the right side of the chart, you will find all information about the open orders. The first tool on the left of this section allows you to overview the situation between buyers and sellers quickly. You can zoom in and out using the scroll wheel on your mouse.
On the right, you can see live buy and sell orders and the latest transactions. You can adjust the orders’ accuracy in the drop-down menu in this area’s upper right corner (0.01 by default).
On the far right, this is where you can place your orders and change your leverage. I detail this section in the rest of the tutorial.
Just below is the section dedicated to deposits, withdrawals, and reloading your Binance Futures wallet:
Finally, the bottom section allows you to monitor your trading activity. You can check the current status of your positions, view your open orders, and get a complete history of past trades:
Transfer funds to your Binance Futures account
To use Binance Futures, you must first deposit funds into it. Since each platform has its own portfolio, the funds it contains cannot be mixed.
However, you can transfer funds back and forth between the Binance Spot Wallet and your Binance Futures Wallet. The transfer is almost instantaneous and free of charge. It is only possible to transfer Tether (USDT) and BNB between the two portfolios.
To transfer funds to your Binance Futures wallet, click on the Transfer button at the bottom right of the page. Define the cryptocurrency and the amount you wish to transfer and click Confirm Transfer:
Adjusting your leverage
Binance Futures allows you to manually adjust the leverage and its mode for each of the available contracts.
To adjust the leverage, click on the “20x” button in the order entry section. Specify the degree of leverage by adjusting the slider, then click on Confirm:
Using leverage will allow you to open a larger amount using fewer funds (here USDT) as collateral. When using a 3x leverage, if you open a 1 BTC long order at $15,000 USDT, it will only cost you $5,000 USDT. However, if the price drops more than 33% (100/3) under your entry price, you are risking a liquidation of that order.
If you are unfamiliar with margin trading notions, I recommend you read our course explaining margin trading basics.
Finally, Binance Futures offers you to change the Margin Mode for all the pairs you are trading on:
Cross Margin allows you to share your total margin balance across your open positions. Thus, if you have a open long trade on Bitcoin with an x10 leverage, but BTC drops 10%, your remaining balance (on your Binance Futures Wallet) will be used as collateral and avoid you to be liquidated.
Isolated Margin restricts you only to allocate the balance you used for an opened position and will never involve your account balance if you do not intervene in the position.
💡 We recommend you to set all your trading pairs to Isolated Margin mode. Being in cross can expose all your Binance Futures balance if you do not manage your risk accordingly. When using Isolated Margin mode, you only risk what you put into the position at first.
Difference Between Spot Trading and Futures Trading
On a quick note, the major difference between spot trading and futures trading is the leverage.
Moreover, due to how the futures market calculates your PNL in real-time, you do not own any commodities, but instead, you have contracts.
You can hedge out spot or hold your risk with an insignificant capital on the Futures platform because of the leverage. For example, if you are holding 10,000 USDT worth of BTC, you can deposit 500 USDT as collateral and short with 20x leverage to hedge your risk fully.
One last but not the least difference can be spotted between Binance Futures & Binance Spot platforms. The latter is the different fee types you can get while trading on Futures, while on Spot Trading, you only have 1 fixed fee per trade.
We are going to explore this difference more in detail in the paragraph below.
The Different Fees in Futures Trading
On Binance Futures, you have 2 types of Trading fees:
- Trading Fees: occurring when one of your orders gets triggered
- Funding Fees: occurring every 8 hours
On Binance Futures, the major difference with Spot Trading is the difference in fees when you are the taker or the maker of a trade.
A maker is a trader setting a limit order filling the orderbook. The taker is the trader trading at the maker’s price order.
In other words, if you open a position at the market price, you are a taker. If you patiently place your position in the orderbook, you are a maker.
Your trading fee rate can be checked here, and follows this table:
You can notice there is a difference between the maker and taker’s fees. A maker will always pay less in fees because he provides liquidity to the exchange.
You can also reduce your trading fees by having a large BTC volume on a 30-day window and holding a specified amount of BNB.
Please note that paying your fees with BNB will get you a 10% discount.
The Funding Rate is a periodic (8hours) fee shared by traders. It is based on the difference between perpetual contract markets and spot prices. The funding rate of a cryptocurrency pair is displayed on the second menu:
On the other hand, a negative funding rate is paid by the short positions to the long positions.
Available orders and their use
On Binance Futures, 5 types of orders are offered.
Before going into the orders’ details, do not hesitate to consult this page summarizing the different fees applied by Binance Futures according to the number of BNBs you hold in your wallet.
The interface itself is quite simple. The choice of the order is made at the top. Based on your current leverage, Binance will tell you how much USDT it will cost you to execute your position.
In the capture below, I would like to place an order with a leverage of x25, including 1 BTC. The tool, therefore, tells me that I would take a position with approximately $634 USDT if I want to long and $439 if I want to short (the difference is explained because I am already in a long position. Thus, shorting would partially close this position and closing a position doesn’t cost you anything).
The Limit Order
A limit order is an order that will position you in the order book with a specific price that you determined in advance. When you place a limit order, the trade will only be executed if the market price reaches the specified price.
Therefore, you can use limit orders to buy at a lower price or sell at a higher price than the current market price. Its use is shown in the capture above.
The Market Order
The market order is an order to buy or sell at the best price currently available in the order book. It is executed against limit orders that have been placed previously by the other traders.
As an additional feature of such an order, you will be subject to taker fees, which are higher than maker fees.
To place such an order, simply fill in the amount you wish to commit and click on the desired button. The execution of a market order is instantaneous.
The Stop-Limit Order
This order includes several components, a stop price, and a limit price. The stop price is simply the price at which the limit order will be triggered. The limit price is the price at which the limit order will be triggered.
This means that your limit order will immediately be placed in the order book once your stop price has been reached.
For example, in Stop, I enter the price at which I want my order to be triggered, here 16,000 USDT. In case the BTC reaches this value, a limit order will then be added to the order book as indicated in Price, here 16,050 USDT:
The Stop-Market Order
Like the stop-limit order, the stop market order uses a stop price as a trigger. However, when the stop price is reached, it triggers a market order instead.
The example below shows that knowing that the BTC is 16,000 USDT, I want to open a long order once its price exceeds 16,000 USDT. Otherwise, if I click the short button, a short position will be opened as soon as the BTC reaches 16,000 USDT:
The Trailing-Stop Order
Like the classic Stop Loss, the trailing stop is an order to close your position in case of a market reversal. It is an essential risk management tool. But what makes it different from the stop loss?
The trailing stop is a dynamic stop loss!
It is maintained at a predefined distance from the highest price reached by an asset’s price in your favor.
As the price of an asset moves in the direction of your trade, the trailing stop will rise on its own in the case of a long position and fall on its own in the case of a short position.
In the case of a price reversal, the stop loss will freeze and close your position automatically if the price hits it, just like a classic stop loss.
In this example, I want to short the market with 1 BTC (the goal can be closing a long position of 1BTC), and after BTC reaches 16,000 USDT, the order will be triggered whenever the price is dropping more than 2% from its maximum price.
Thus, I will put 2% in the Callback Rate field and 16,000 USDT in the Activation Price field.
If you wish to learn more about Trailing Stop, please discover it in our Complete course about Trailing Stops.
What is Post-Only, Time in Force and Reduce-Only?
When using limit orders, you can define additional instructions in parallel. Besides, with Binance Futures, you can add optional features to your orders by clicking on the ⏬ button above the Long and Short buttons:
Three options are available, Post-Only, Time in Force (TIF) – itself composed of 3 options – and Reduce-Only. Let’s see in detail what they are used for:
If you check the Post-Only box, it means that your order will always be added to the order book first and will never be executed against an existing order in the order book. Post-Only cannot be used in parallel with the TIF option.
The Time-in-Force option allows you to specify how long your orders will remain active before being executed or expiring. Three options are available:
- GTC (Good Till Cancel): The order will remain active until it is executed or canceled.
- IOC (Immediate or Cancel): The order will be executed immediately. If it is only partially executed, the unfilled portion of the order will be canceled.
- FOK (Fill Or Kill): The order must be filled completely and immediately. Otherwise, it will not be executed.
Checking the Reduce-Only box ensures that the new orders you set will only decrease, and never increase your current open positions.
Types of Position Mode
On Binance, you can choose between 2 modes regarding your trading preferences:
- The One-Way Mode
- The Hedge Mode
If you wish to change your mode, simply click over the 3 dots on the upper corner of the right panel:
Then, you can choose the mode you prefer.
In the one-way mode, you can only hold positions in one direction under the same contract. In other words, you can not have a BTCUSDT short and a BTCUSDT long. If you want to add another long position to your existing long position, both will sum up into one position, and the entry will be averaged.
In Hedge mode, you can hold positions in both long and short directions under the same contract as per the example below:
How to use Binance Calculator?
Binance Futures also includes a calculator that will allow you to verify your orders before executing them. This calculator allows you to calculate the data you need before opening a long or short position.
To activate it, click on the calculator button in the upper right corner of your interface:
Although discreet, this option proves to be a great ally to check any order you are about to open. I strongly advise you to use it systematically. The Binance Futures calculator consists of 3 tabs:
PNL – This tab is used to calculate your initial margin, Profits & Loss, and return on equity (ROE%) based on the expected entry and exit price and the position’s size.
Target Price – This tab is used to calculate at what price you will need to exit your position to achieve the desired percentage return.
Liquidation Price – This tab is your estimated liquidation price based on your portfolio balance, expected entry price, and position size.
Max Open – This tab will indicate the maximum position size you can enter the market by considering your balance, the leverage, and the entry price.
Open Price – This tab will calculate your average entry if you decide to have several entry points.
For example, with a leverage of x20, I want to know what will be the profits if I enter in a long position at $16,000 and exits at $17,000. The calculator tells me the Profits will be 1,000 USDT.