How to trade futures on Binance — A beginner’s guide

Binance Futures lets you speculate on cryptocurrency price movements without buying the underlying asset. You can potentially profit from both rising and falling markets, but leverage means losses can mount quickly.

Before placing a trade, you need to understand how it works, including leverage, margin, funding rates, trading fees and liquidation risk.

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How Binance Futures works

Binance Futures uses derivative contracts that track cryptocurrency prices. Rather than owning the asset, you open a contract that gains or loses value as the underlying cryptocurrency’s price changes. You can take a long position when you expect the price to rise or a short position when you expect it to fall.

You can also use leverage to control a larger position with less money upfront. This increases your potential gains but also increases your potential losses, and a sufficiently large move against your position can trigger liquidation.

1. Choose a futures contract

Before placing a trade, you’ll need to choose the type of futures contract you want to trade. Binance offers USDⓈ-M and COIN-M contracts, as well as perpetual and delivery contracts.

• USDⓈ-M Futures use stablecoins such as USDT as collateral and settle profits and losses in stablecoins.
• COIN-M Futures use cryptocurrency as collateral and settle profits and losses in cryptocurrency.
• Perpetual contracts don’t have an expiration date and use funding payments to help keep their price close to the underlying asset.
• Delivery contracts have a fixed expiration date and are settled when the contract expires.

For most traders, USDⓈ-M perpetual contracts are the simplest place to start because they use stablecoin collateral and don’t expire.

2. Transfer funds to your Futures wallet

Before you can open a futures position, you need to transfer funds from your Binance spot wallet to your Futures wallet. The transfer is internal and does not incur a blockchain network fee.

You can transfer supported assets between your wallets from the Assets section of Binance. Make sure you’re transferring funds to the correct Futures wallet for the contract you want to trade.

3. Choose your margin mode and leverage

Before placing your order, choose whether to use isolated or cross margin, then set your leverage.

• Isolated margin limits the margin assigned to a position, so other funds in your Futures wallet aren’t automatically used to support it.
• Cross margin uses your available Futures wallet balance to help support open positions, which can reduce the risk of an individual position being liquidated but can expose more of your balance to losses.

Next, choose your leverage. Higher leverage lets you open a larger position with less margin, but it also increases the risk of liquidation.

Binance’s maximum leverage varies by contract and position size, so don’t assume that every Futures contract supports the maximum leverage of 125x.

4. Choose your position size and order type

Decide how much you want to trade before placing your order. Your position size is the total value of the futures contract, while your margin is the amount you commit to support that position. Using leverage allows you to open a position larger than your margin.

Next, choose an order type. Binance offers the following order types and position-management tools for Futures:

• Market order: Executes immediately at the best available price.
• Limit order: Executes only at your specified price or better.
• Stop-market order: Places a market order when the specified trigger price is reached.
• Stop-limit order: Places a limit order when the specified trigger price is reached.
• Take-profit order: Automatically closes a position when the price reaches your specified profit target.
• Take-profit limit order: Places a limit order when your specified profit target is reached, giving you more control over the execution price.
• Trailing-stop order: Automatically adjusts the stop price as the market moves in your favor, helping lock in potential gains while allowing the position to remain open if the price continues moving in your favor.
• Limit Maker/Post-Only order: Places a limit order that is designed to add liquidity rather than immediately execute against an existing order.
• One Cancels the Other (OCO): Links two orders so that when one executes, the other is automatically canceled.
• One Triggers the Other (OTO): Places a secondary order only after the initial order has fully executed.
• One Triggers One Cancels the Other (OTOCO): Combines OTO and OCO, allowing a follow-up order to trigger a take-profit and stop-loss pair.

5. Open and manage your position

Once you’ve chosen your contract, margin mode, leverage, position size and order type, you can place your trade. Choose Buy/Long if you expect the price to rise or Sell/Short if you expect it to fall.

After opening a position, monitor its unrealized profit or loss, margin balance, liquidation price and funding payments. You can also set take-profit and stop-loss orders to automatically close the position if the price reaches your chosen level.

If the market moves far enough against your position, Binance can liquidate it automatically. The exact liquidation price depends on factors including your position size, leverage, margin mode and maintenance margin requirements.

6. Close your position

When you’re ready to exit, close the position by placing an order in the opposite direction. For example, close a long position by selling and close a short position by buying.

You can close the entire position or only part of it. Your final profit or loss is determined by the difference between your entry and exit prices, minus applicable trading fees and, for perpetual contracts, any funding payments.

Binance Futures fees

Binance Futures charges fees when you open and close a position. The amount depends on the contract, your VIP tier and whether your order is classified as a maker or taker.

Binance’s standard USDⓈ-M Futures rates are currently 0.02% for makers and 0.05% for takers, although promotions and individual fee tiers can change the rates.⁽¹⁾

• Maker fees. Apply when your order adds liquidity to the order book, such as an eligible limit order that isn’t immediately matched.
• Taker fees. Apply when your order removes liquidity from the order book, such as a market order. Taker fees are generally higher than maker fees.
• Funding rates. Perpetual futures also have funding payments exchanged between long and short traders. Binance doesn’t charge a separate fee on funding payments. The funding rate varies by contract and market conditions, and the default funding interval is generally every eight hours.
• Liquidation fees. If Binance liquidates your position, it deducts a Liquidation Clearance Fee based on the applicable rate and the position’s notional value. The rate varies by contract.
• BNB discounts. Binance offers a 10% discount on standard USDⓈ-M Futures trading fees when eligible users pay their trading fees with its native cryptocurrency BNB.⁽²⁾
• VIP discounts. Traders with higher qualifying trading volumes can receive lower maker and taker rates through Binance’s VIP program.

How Binance Futures liquidation works

Liquidation occurs when a futures position no longer has enough margin to meet Binance’s maintenance margin requirements. When this happens, Binance’s liquidation system automatically closes the position to prevent further losses.

Your liquidation price depends on factors including your entry price, position size, leverage, margin mode, maintenance margin requirements and available margin. You can use Binance’s Futures calculator to estimate liquidation prices.

If Binance liquidates your position, it may also deduct a Liquidation Clearance Fee based on the applicable rate and the position’s notional value.

Binance Futures demo trading for beginners

Binance’s demo trading lets you practice Futures trading with simulated funds instead of real money. This lets you learn the interface and test strategies before you put your actual money at risk.

With demo trading, you can:

• Practice opening and closing positions
• Test different leverage levels and margin modes
• Try different order types
• Practice setting stop-loss and take-profit orders
• Familiarize yourself with the Futures interface

Keep in mind:

• Simulated execution may not exactly match live trading.
• It doesn’t replicate the psychological pressure of losing real money.
• A strategy that works in a demo account may perform differently in live markets.

Binance Futures trading tools

Binance Futures includes several tools that can help you analyze markets, automate strategies and manage positions.

• Trading bots. Binance offers automated strategies including Futures Grid, which places buy and sell orders at preset price intervals. Futures Grid can use leverage and support long or short strategies, so it carries the same liquidation risks as other leveraged Futures positions.
• Copy trading. Binance lets users automatically copy the Futures trades of selected lead traders. You can review a trader’s performance history and risk information before deciding whether to follow them, but copied trades can still lose money.
• Futures calculator. The calculator can help estimate potential profit and loss, target prices, liquidation prices and other trade parameters before you place an order.
• Charts and technical indicators. Binance’s Futures interface includes price charts and technical-analysis tools for analyzing price movements and planning trades.
• Market data. The Futures interface provides data such as open interest, funding rates, long/short ratios and liquidation activity. Open interest shows the number of outstanding futures contracts, while funding rates show the periodic payments exchanged between long and short positions on perpetual contracts.

Binance Futures pros and cons

Binance Futures offers a broad range of contracts and advanced trading tools, but its leverage and complexity make it better suited to experienced traders than beginners.

Bottom line

Binance Futures offers demo trading, advanced trading tools and tiered fees with opportunities for discounts. However, leverage, funding costs and liquidation make Futures substantially riskier than spot trading. It’s best suited to experienced traders who understand margin and leverage and are comfortable with the possibility of rapid losses.

If Binance Futures isn’t available where you live, or you want to compare fees, features and security before choosing an exchange, see our picks for the best crypto exchanges and trading platforms.

Frequently asked questions

• Is Binance Futures gambling?

  Binance Futures isn't technically gambling because you're trading derivative contracts whose value is based on the price of an underlying asset. However, high-leverage Futures trading can resemble gambling if you make trades based on chance rather than a defined strategy and risk-management plan.

• Can I trade with $1 on Binance Futures?

  Not necessarily. Binance Futures has minimum order requirements that vary by contract, so having $1 in your account doesn't guarantee that you can open a position. For example, some newer Binance Futures contracts have a minimum notional value of 5 USDT.⁽³⁾
  Even when a contract allows a small position, $1 provides very little margin and leaves little room for fees, price movements or maintenance-margin requirements. You shouldn't assume that high leverage makes $1 a practical amount to trade with.
  Always check the minimum notional and margin requirements for the specific contract before placing an order.

To make sure you get accurate and helpful information, this guide has been edited by Matt Miczulski as part of our fact-checking process.

Written by

Holly Jennings

Deputy Crypto Editor

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Holly Jennings is the deputy crypto editor and updates writer at Finder, working with writers across all niches to deliver quality content to readers. She’s edited hundreds of financial articles ranging from credit cards to investments. With empathy at heart, she especially enjoys content that breaks down complex financial situations into easy-to-understand information. Prior to her role at Finder, she collaborated with dozens of small businesses to maximize the reach and impact of their blog posts, website copy and other content. In her spare time, she is an award-winning author for Penguin Random House, writing about virtual reality worlds, magical girls and lasers that go pew-pew. See full bio

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Holly has written 74 Finder guides across topics including:

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Frank Corva

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Frank Corva is business-to-business (B2B) correspondent for Bitcoin Magazine and formerly the cryptocurrency writer and analyst for digital assets at Finder. Frank has turned his hobby of studying and writing about crypto into a career with a mission of educating the world about this burgeoning sector of finance. He worked in Ghana and Venezuela before earning a degree in applied linguistics at Teachers College, Columbia University. He also taught writing and entertainment business courses in Japan and worked with UNICEF in Namibia before returning to the US to teach at universities in New York City. Earlier in his career, he spent years working as a publicist and graphic designer for record labels like Warner Music Group and Triple Crown Records. During that time, he was also a music journalist whose writing and photography was in published in Alternative Press, Spin and other outlets. See full bio