7 Steps to Understand Binance Futures Trading

Binance Futures is a trading platform from Binance, a top cryptocurrency exchange. It lets traders bet on future cryptocurrency prices by buying and selling futures contracts.

Here’s how Binance Futures trading works:

Futures Contract: A futures contract is an agreement to buy or sell a cryptocurrency at a set price on a future date. Binance Futures offers contracts for cryptocurrencies like Bitcoin, Ethereum, and Binance Coin.

Leverage: Traders can use leverage to borrow funds and increase their buying power. For example, to buy a $10,000 Bitcoin futures contract with 10x leverage, a trader only needs $1,000 of their own money. The remaining $9,000 is borrowed from the exchange.

Long or Short: Traders can go long or short on a futures contract. Going long means they expect the price to rise. Going short means they expect the price to fall.

Margin: Traders must keep a certain amount of margin in their account to cover potential losses. If the margin drops too low, traders may get a margin call and need to add more funds or risk having their position closed.

Mark Price: Binance Futures uses a mark price to value futures contracts. The mark price averages the current price of the cryptocurrency across various exchanges. This helps prevent price manipulation and smooths out short-term price swings.

Fees: Binance Futures charges fees on each trade, based on the position size and order type. Traders can get fee discounts by holding Binance Coin (BNB) in their account.

Risk Management Tools: Binance Futures offers tools like stop-loss orders, take-profit orders, and trailing stop orders. These tools help traders limit losses and secure profits.