Futures trading is a type of derivative trading that allows both long and short positions, enabling you to control larger trades with a smaller amount of capital. After registering on Binance, you can explore the futures feature. Download the Binance APP to trade futures on your phone as well.
The Basic Concept of Futures Trading
Simply put, futures trading isn't directly buying and selling cryptocurrency -- it's trading on price movements. You can:
- Go long: Open a long position when you predict the price will rise; you profit when it goes up
- Go short: Open a short position when you predict the price will fall; you profit when it drops
What Is Leverage
Futures trading allows you to use leverage to amplify returns. For example, with 10x leverage, 100 USDT in margin controls a 1,000 USDT position. A 1% price move translates to a 10% gain or loss for you.
Risks of Futures Trading
Leverage is a double-edged sword, amplifying both gains and losses:
- Higher leverage means greater liquidation risk
- Violent price swings can quickly wipe out your margin
- Not suitable for beginners without trading experience
Perpetual vs. Delivery Contracts
Binance offers two types of contracts:
- Perpetual contracts: No expiration date, can be held indefinitely
- Delivery contracts: Have a fixed expiration date, automatically settled at maturity
Most users trade perpetual contracts.
Advice for Beginners
If you're new to futures, it's recommended to practice on Binance's demo account first. Don't risk real money until you're comfortable. Once you understand the mechanics, start with small amounts.