Binance is the largest crypto exchange globally in terms of daily trading volumes. Hence, this article discusses how to hedge, trade, and do a deep dive in Binance futures trading and various terms related to them.
Table of contents
- Summary (TL;DR)
- What is Binance Futures?
- Binance Crypto Futures Market
- COIN-Margined Vs USDⓈ-Margined
- Leverage and Margin of contracts
- How to open a Futures account on Binance?
- Difference between Isolated Margin and Cross Margin
- What happens in case of Liquidation?
- Perpetual Contract Vs Traditional Futures Contract
- Binance Futures Trading: Funding Rate
- What is Auto-Deleveraging (ADL)?
- Binance Futures Trading: Fees Schedule
- How to Borrow funds using Cross Collateral?
- What is Hedge Mode?
- What is Binance BTCDOM Index?
- Binance Futures Trading: Conclusion
- Frequently Asked Questions
- Future trading in USDⓈ-Margined contract means settlement happens in USD-pegged assets like USDT or BUSD.
- Future trading in Coin-Margined contract means denominated and settled in the underlying cryptocurrency.
- The maintenance margin model is a sophisticated risk control system and a liquidation model to support high leverage trading.
- The trader can use isolated Margin or Crossed Margin mode as per their trade requirement.
- Funding rates are payments made to long or short traders, calculated on the difference between the perpetual contract price and spot price.
What is Binance Futures?
Binance is the largest crypto exchange platform and allows you to trade in a variety of cryptocurrencies. Furthermore, they have a broad number of crypto derivative instruments. Along with that, Binance Futures lets the traders and investors trade in many different ways. For example, the platform offers Coin Margined and USDT Margined futures trading.
Also, read our guide to futures trading to understand the futures market better.
Binance Crypto Futures Market
USDⓈ-Margined futures contracts
The Binance USDT-Margined contract has the following characteristics:
- Settlement happens in USD-pegged assets, i.e., and they are denominated and settled in USDT or BUSD.
- The contract follows a Clear Pricing Rule where each future contract specifies the base asset’s quantity delivered for a single contract known as ‘’Contract Unit’’. For example – BTC/ USDT, ETH/ USDT, and BCH/ USDT.
- Expiration – Perpetual and Quarterly
- The minimum notional value of each order must be not less than the threshold of 5 USDT. The order will be rejected if the threshold is less.
- In this case, “Reduce only” orders are not affected.
Coin-Margined Future Contracts
- The Binance Coin margined contract has the following characteristics
- They are settled in cryptocurrency, i.e., they are denominated and settled in the underlying crypto. The trader doesn’t need to hold stablecoins as collateral.
- A contact multiplier represents the value of a contract. For example, each BTC futures contract represents 100 USD, while each ETH futures contract represents 10 USD.
- Expiration – Perpetual, Quarterly, and Bi-quarterly
- It is important to note that Binance futures will regularly adjust the minimum order threshold without prior intimation. Therefore, traders must check via API for details regularly.
|Collateral||Cryptocurrency (i.e. BTC, ETH)||USDT, BUSD|
|Margin Type||Isolate/ Cross||Isolate/ Cross|
COIN-Margined Vs USDⓈ-Margined
|Denominated and settled in cryptocurrency.||Linear crypto futures are quoted in USDT or BUSD.|
|Ideal for HODler or miner, any profits made can contribute to the long-term stack.||Easy to calculate returns in Fiat currency. This makes them more intuitive.|
|The contract can be used as a direct hedge for the trader’s spot investment.||They are more flexible as there is no need to buy the underlying crypto asset.|
|‘The need to convert your holding into USDT is not required.||It can help to reduce risk in high volatility markets or during a giant price swing. Then, the need for a hedge is less.|
Leverage and Margin of contracts
Binance uses a Maintenance Margin model, a sophisticated risk control system, and a liquidation model to support high leverage trading. The maximum amount of leverage available depends on the notional value of the trader’s position, i.e., the more considerable the position, the lower the leverage.
Furthermore, the leverage can be adjusted according to the traders’ needs and will calculate position size based on the contract’s notional value (USDT or BUSD denominated). The Initial Margin is calculated as per the leverage selected by the trader.
Rules to use Leverage on Binance
From July 19th, 2021, Binance has introduced leverage limits for the trader with registered futures account of fewer than 30 days. The leverage limits are as follows.
- Newly registered accounts less than 30 days old will not be allowed to open positions with leverage exceeding 20x.
- The new leverage limit will apply to the existing users with registered future accounts of less than 30 days –
- Users with open positions of less than 20x leverage will not be allowed to adjust their open positions beyond 20x leverage.
Users with open positions of more than 20x leverage may choose to maintain their position leverage but will not increase their position leverage further. Instead, they will be allowed only to deleverages their open position to 20x below.
- For new users with no open position, all new positions must not exceed 20x leverage.
- Leverage limits for new users will increase gradually only after one month from registration.
How to open a Futures account on Binance?
- Open the ‘’Binance Futures’’ page once you log into your Binance account.
- Now, Click “Open Account”, that will redirect you to the Futures trading interface.
- After you successfully enable your futures account, you can start with Binance futures trading after funding your account.
- To transfer funds into your futures accounts, you can head over to the wallet section.
- Thereafter, transfer funds from fiat and spot account to your Futures account.
- In case you don’t have any funds in your Fiat account, you can refer to our Binance review for detailed steps.
Furthermore, you’ll need to enable 2FA to fund your account before start trading on Binance Futures.