How to trade futures on Binance with leverage? (Margin Trading)

Understanding Futures Contracts on Binance

1. Binance Futures offers perpetual and quarterly contracts tied to underlying assets such as BTC, ETH, and other major cryptocurrencies.

2. Each contract has a base asset and a quote asset; for example, BTCUSDT denotes Bitcoin quoted in Tether.

3. Traders can go long or short depending on directional market expectations without owning the underlying coin.

4. All futures positions are settled in the quote asset, meaning profits and losses are calculated and distributed in USDT or BUSD for stablecoin-margined products.

5. Contract specifications including tick size, minimum order quantity, and leverage range are published in the contract details section before placing any order.

Setting Up Leverage and Margin Mode

1. Users must switch from spot wallet to futures wallet using the top-right wallet selector on the Binance Futures interface.

2. Isolated and cross margin modes are available; isolated mode restricts risk to the allocated margin per position, while cross applies all available wallet balance as collateral.

3. Leverage can be adjusted pre- or post-position opening via the “Leverage” slider located beside the order entry panel.

4. Higher leverage amplifies both gains and losses; 125x is the maximum for certain pairs but requires strict risk management discipline.

5. Changing leverage after entering a position does not affect unrealized PnL but alters liquidation price sensitivity immediately.

Placing and Managing Futures Orders

1. Market, limit, stop-market, stop-limit, take-profit-market, and trailing-stop orders are supported across all futures markets.

2. Order size is expressed in number of contracts or in quote currency value, with automatic conversion based on current mark price.

3. A position’s initial margin is deducted upon order execution, and maintenance margin requirements update dynamically with price movement.

4. Open positions appear under the “Positions” tab where users can manually add margin, reduce size, or close entirely with one-click functionality.

5. Real-time funding rate data is displayed for perpetual contracts, influencing holding costs every eight hours.

Risk Management Tools and Liquidation Mechanics

1. Liquidation occurs when equity falls below maintenance margin, triggering an automatic position closure at the bankruptcy price.

2. The insurance fund absorbs losses from forced liquidations, protecting solvent accounts from clawbacks.

3. Users can monitor their margin ratio, estimated liquidation price, and unrealized PnL directly in the position panel.

4. Partial liquidation is not supported—entire positions are closed upon breach of margin requirements.

5. Negative balance protection ensures traders cannot lose more than their initial margin deposit, enforced by Binance’s risk engine.

Frequently Asked Questions

Q: Can I use my spot wallet balance as margin for futures trading?A: No. Funds must be transferred manually from the spot wallet to the futures wallet before initiating any trade.

Q: What happens if I hold a position during a contract expiry?A: Only perpetual contracts remain open indefinitely; quarterly contracts settle automatically at expiration using the final settlement price derived from index feeds.

Q: Is there a fee for changing leverage mid-position?A: No fee is charged for adjusting leverage, but doing so recalculates liquidation parameters instantly and may expose the position to higher risk.

Q: How is funding paid or received?A: Funding is exchanged between long and short holders every eight hours; if the funding rate is positive, longs pay shorts, and vice versa—calculated as (mark price − index price) / index price × time factor.