Crypto derivatives enable traders to gain exposure to a wide range of digital assets without owning them. It allows market participants to hedge against volatility and speculate on the future value of specific cryptocurrencies. The use of leverage improves capital efficiency as investors don’t have to lock up large amounts of capital, unlike on the spot markets.
Trillions of dollars are traded every month in the cryptocurrency market as traders jump at opportunities to make quick profits, no matter the trend’s direction. Derivatives contracts enable traders to benefit from price fluctuations by going long (buying low and selling high) or shorting (selling high and buying low).
With over 500 trading pairs available on Binance Futures, the trading platform has grown to become the world’s most liquid crypto derivatives exchange, allowing users to avoid unnecessary risks.
In this guide, we’ll explain how you can get started with Binance Futures and join more than 29 million active traders today!
Step 1: Sign Up for a Binance Account
If you already have a Binance account, proceed to Step 2. If you don’t have an account yet, go to Binance and click [Register] at the top right corner of the page before moving onto the next step.
Choose [Sign up with phone or email], [Continue with Apple], or [Continue with Google].
Select your [Country/Area of Residence] and click [Confirm].
Click [Create Personal Account], or for businesses, click [Create Entity Account].
Enter your [Email], create a strong [Password] for your Binance account, and click [Next]. You’ll be asked to enter an [Email Verification Code] and click [Submit].
Enter your [Phone Number] and click [Next]. You’ll be asked to enter a [Phone Verification Code] and click [Submit] to create your Binance account.
Step 2 — Open a Binance Futures Account
- log in to your Binance account, move your mouse to the bar at the top of the page on [Derivatives], and click on USD(S)-M Futures.
- Click on the [Open now] button to activate your Binance Futures account. You’ll now be able to trade futures products on Binance. Note that you should still prepare and educate yourself before you can responsibly use the product.
Step 3 — How to Fund Your Binance Futures Account
To fund your Futures account, you’ll first need to make sure you have funds available in your Binance account you can transfer over. These funds could be in your Funding, Fiat and Spot, Margin, or Options wallet. If you don’t have any funds deposited to Binance
- To transfer funds to your Futures Wallet, click on the transfer icon on the right side of the Binance Futures page.
- Set the amount you’d like to transfer and the wallet you want to use before clicking [Confirm]. You should see the balance added to your Futures Wallet shortly. You can also change the direction of the transfer should you wish.
Understanding the Binance Futures Interface
1. In the [Menu] area, you’ll find links to other Binance pages, such as COIN-M Futures, Options, Strategy Trading, and Activities. Under the [Information] tab, you can find links to Futures FAQ, API Access, funding rate, index price, and other market data.
On the right side of the top bar, you can access your Binance account. You can easily check your wallet balances and orders across the entire Binance ecosystem.
2. In the [Price Chart] section, you can:
- Choose a contract by hovering over the current contract’s name (BTCUSDT by default).
- Check the Mark Price. This is especially important to note, as liquidations happen based on the Mark Price.
- Check the expected funding rate and a countdown until the next funding round.
- See your current chart. You can switch between the Original or the integrated TradingView chart. You’ll get a real-time display of the current order book depth by clicking on [Depth].
- See live order book data. You can adjust the accuracy of the order book in the dropdown menu in the top right corner of this area (0.01 by default).
- See a live feed of previously executed trades on the platform.
3. The [Trading Activity Panel] lets you monitor your futures trading activity. You can switch tabs to check your position’s current status and your currently open and previously executed orders. You can also get a full trading and transaction history for a given period.
4. In the [Margin Overview] section, you can check your available assets, transfer, and buy more crypto. This is also where you can view information relating to the current contract and your positions. Be sure to keep an eye on the margin ratio to prevent liquidations.
By clicking on [Transfer], you can transfer funds between your Futures Wallet and the rest of the Binance ecosystem.
5. The [Order Entry] field is where you’ll input your Buy/Long and Sell/Short orders. You can find a detailed explanation of the available order types further down in this article. You can also switch between Cross Margin and Isolated Margin at the top of the view. If you want to adjust your leverage, clicking on your current leverage amount (20x by default).
In all of these modules/sections, you can resize the element to your liking. Whenever you see an arrow on the bottom right corner of a module, you can drag it to your preferred layout. This way, you can easily create your own custom interface.
How to Adjust Your Leverage
Binance Futures allows you to manually adjust the leverage of each contract. To choose a specific contract, go to the top left of the page and hover over the current contract (BTCUSDT by default).
To adjust the leverage, go to the [Order Entry] section field and click on your current leverage amount (20x by default). You can specify the amount of leverage by adjusting the slider, or by typing it in, and clicking on [Confirm].
Note that the larger the position size is, the smaller the amount of leverage is that you can use. Similarly, the smaller the position size, the larger the leverage you can use. Using higher leverage also carries a higher risk of liquidation.
As always, every trader should carefully consider the amount of leverage that they use and its associated risk.
What Is the Difference Between the Mark Price and Last Price?
To avoid spikes and unnecessary liquidations during periods of high volatility, Binance Futures uses a last price and mark price.
- The last price is easy to understand. It means the last price the contract was traded at. In other words, the last trade in the trading history defines the last price. It’s used for calculating your realized PnL (Profit and Loss).
- The mark price is designed to prevent price manipulation. It’s calculated using a combination of funding data and a basket of price data from multiple spot exchanges. Your liquidation prices and unrealized PnL are calculated based on the mark price.
Note that the mark price and the last price may differ.
Setting stop price triggers
When setting an order type that uses a stop price as a trigger, you can select either the last price or the mark price as the trigger. To do this, select the price you wish to use in the [Trigger] dropdown menu at the bottom of the order entry field.
What Order Types Are Available and When to Use Them?
When placing your orders, you have a range of options to choose from:
Limit Order
A limit order is an order placed on the order book with a specific limit price. When you place a limit order, the trade will only be executed if the market price reaches your limit price (or better). You can use limit orders to potentially buy at a lower price or to sell at a higher price than the current market price.
Market Order
A market order is an order to buy or sell at the best available current price. It is executed against the limit orders previously placed on the order book. When placing a market order, you will pay fees as a market taker.
Stop-Limit Order
The easiest way to understand a stop-limit order is to break it down into its stop price and limit price. The stop price is the price that triggers the limit order, and the limit price is the limit price of the triggered limit order. This means that once your stop price has been reached, your limit order will be immediately placed on the order book.
Although the stop and limit prices can be the same, this is not a requirement. In fact, you could set the stop price (trigger price) a bit higher than the limit price for sell orders or a bit lower than the limit price for buy orders. This could increase the chances of your limit order filling after reaching the stop price.
Stop Market Order
Similar to a stop-limit order, a stop market order uses a stop price as a trigger. However, when the stop price is reached, it triggers a market order instead.
Take-Profit Limit Order
A take-profit limit order is similar to a stop-limit order. It involves a trigger price, the price that triggers the order, and a limit price, the price of the limit order that is then added to the order book. The key difference between a stop-limit order and a take-profit limit order is that a take-profit limit order can only be used to reduce open positions.
A take-profit limit order can be a useful tool to manage risk and lock in profit at specified price levels. It can also be used in conjunction with other order types, such as stop-limit orders, allowing you to have more control over your positions.
Please note that these are not OCO orders. For example, if your stop-limit order is hit while you also have an active take-profit limit order, the take-profit limit order remains active until you manually cancel it. You can set a take-profit limit order under the [Stop Limit] option in the order entry field.
Take-Profit Market Order
Similar to a take-profit limit order, a take-profit market order uses a stop price as a trigger. However, when the stop price is reached, it triggers a market order instead. You can set a take-profit market order under the Stop Market option in the order entry field.
Trailing Stop Order
A trailing stop order helps you lock in profits while limiting the potential losses on your open positions. For a long position, this means that the trailing stop will move up with the price if the price goes up.
However, if the price moves down, the trailing stop stops moving. If the price moves a specific percentage (called the callback rate) in the other direction, a sell order is issued. The same is true for a short position but in reverse. The trailing stop moves down with the market but stops moving if the market starts going up. If the price moves a specific percentage in the other direction, a buy order is issued.
The activation price is the price that triggers the trailing stop order. If you don’t specify the activation price, this will default to the current Last price or mark price. You can set which price it should use as a trigger at the bottom of the order entry field.
The callback rate is what determines the percentage amount the trailing stop will “trail” the price. So, if you set the callback rate to 1%, the trailing stop will keep following the price from a 1% distance if the trade is going in your direction. If the price moves more than 1% in the opposite direction of your trade, a buy or sell order is issued (depending on the direction of your trade).
How to Use the Binance Futures Calculator
You can find the calculator at the top of the order entry field. It allows you to calculate values before entering either a long or short position. You can adjust the leverage slider in each tab to use it as a basis for your calculations.
The calculator has three tabs:
- PNL — Use this tab to calculate your Initial Margin, Profit and Loss (PnL), and Return on Equity (ROE) based on intended entry and exit price and position size.
- Target Price — Use this tab to calculate the price you’ll need to exit your position at to reach the desired percentage return.
- Liquidation Price — Use this tab to calculate your estimated liquidation price based on your wallet balance, your intended entry price, and position size.
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