Binance Futures Tutorial

Binance Futures: A Beginner's Guide

Binance Futures allows you to trade cryptocurrency with *leverage*. This means you can control a larger position with a smaller amount of capital. While this can amplify profits, it also significantly increases risk. This guide is for complete beginners and will walk you through the basics of trading on Binance Futures. Remember, trading futures is complex and carries substantial risk. Always start with a demo account and only risk what you can afford to lose.

What are Cryptocurrency Futures?

Traditional futures contracts are agreements to buy or sell an asset at a predetermined price on a future date. Cryptocurrency futures are similar, but deal with cryptocurrencies like Bitcoin and Ethereum.

Leverage* is the key difference. Let's say you want to buy $100 worth of Bitcoin, but only have $10. With 10x leverage, you can control that $100 position. If Bitcoin's price increases, your profit is magnified. Conversely, if the price decreases, your losses are also magnified.

There are two main types of futures contracts:

**Perpetual Contracts:** These contracts don't have an expiration date. They are the most common type traded on Binance Futures.
**Delivery Contracts:** These contracts have a specific expiration date, and involve actual delivery of the cryptocurrency.

This guide focuses on Perpetual Contracts.

Understanding Key Terms

Before you start trading, you need to understand these terms:

**Margin:** The amount of cryptocurrency you need in your account to open and maintain a leveraged position.
**Leverage:** The ratio of your trading position to your margin. (e.g., 10x leverage means your position is 10 times larger than your margin).
**Long:** Betting that the price of the cryptocurrency will *increase*.
**Short:** Betting that the price of the cryptocurrency will *decrease*.
**Entry Price:** The price at which you open your position.
**Liquidation Price:** The price at which your position will be automatically closed to prevent further losses. This is a critical concept to understand!
**Funding Rate:** A periodic payment exchanged between long and short positions, depending on market conditions. It’s a mechanism to keep the futures price anchored to the spot price.
**Mark Price:** An average of the spot price and the futures price, used to calculate unrealized P&L and liquidation price.
**Unrealized P&L:** The potential profit or loss if you were to close your position *right now*.
**Realized P&L:** The actual profit or loss you make when you *close* your position.
**Stop-Loss:** An order to automatically close your position when it reaches a certain price, limiting your potential losses. See Risk Management for more details.

Getting Started on Binance Futures

1. **Create a Binance Account:** If you don't already have one, sign up at Register now. 2. **Complete Verification:** Binance requires you to verify your identity for security reasons. 3. **Transfer Funds:** Transfer cryptocurrency (like USDT or BUSD) from your Spot Wallet to your Futures Wallet. 4. **Enable Futures Trading:** You need to specifically enable futures trading in your Binance account settings. Binance will require you to take a risk warning test. 5. **Choose a Contract:** Select the cryptocurrency pair you want to trade (e.g., BTCUSDT, ETHUSDT).

How to Place a Trade

Let's walk through a simple long trade:

1. **Select a Contract:** Choose the cryptocurrency pair (e.g., BTCUSDT). 2. **Select Leverage:** Choose your desired leverage. *Start with low leverage (2x or 3x) when you're learning!* 3. **Select Position Size:** Enter the amount of USDT you want to use to open your position. Binance will display the estimated margin, entry price, and liquidation price. 4. **Set Stop-Loss & Take-Profit (Highly Recommended):** These orders automatically close your position to limit losses or secure profits. See Technical analysis for more information. 5. **Click "BUY/LONG":** This opens your long position.

To place a short trade, click "SELL/SHORT" instead of "BUY/LONG".

Risk Management is Crucial

Trading with leverage is inherently risky. Here's how to manage your risk:

**Use Stop-Loss Orders:** Always set a stop-loss order to limit potential losses.
**Start with Low Leverage:** Don't overleverage your positions.
**Position Sizing:** Only risk a small percentage of your capital on each trade (e.g., 1-2%).
**Understand Liquidation:** Know your liquidation price and avoid letting your position get close to it.
**Diversify:** Don't put all your eggs in one basket. Consider trading multiple cryptocurrencies. See Portfolio Management.
**Use the Demo Account:** Practice trading with virtual funds before risking real money.

Comparing Binance Futures to Spot Trading

Here's a table comparing Binance Futures and Spot Trading:

Feature	Spot Trading	Futures Trading
Leverage	No leverage	Yes, up to 125x
Risk	Lower risk	Higher risk
Complexity	Simpler	More complex
Funding Rates	Not applicable	Applicable (periodic payments)
Contract Expiration	No expiration	Perpetual or Delivery

Other Exchanges

While this guide focuses on Binance Futures, other exchanges offer similar services. Here are a few alternatives:

Start trading Bybit
Join BingX BingX
Open account Bybit (Bulgarian)
BitMEX BitMEX

Further Learning

Disclaimer

Cryptocurrency trading involves substantial risk of loss. This guide is for informational purposes only and should not be considered financial advice. Always do your own research and consult with a qualified financial advisor before making any investment decisions.

Recommended Crypto Exchanges

Exchange	Features	Sign Up
Binance	Largest exchange, 500+ coins	Sign Up - Register Now - CashBack 10% SPOT and Futures
BingX Futures	Copy trading	Join BingX - A lot of bonuses for registration on this exchange

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Register on Binance (Recommended for beginners)
Try Bybit (For futures trading)

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⚠️ *Disclaimer: Cryptocurrency trading involves risk. Only invest what you can afford to lose.* ⚠️