Binance Futures is now letting traders choose up to 125x leverage on their futures trades. How do you take advantage of this option, and what should you look out for? Find out in this blog.
Just a month after Binance Futures successfully launched, we’re upping the ante more than fivefold. We recently launched customized leverage, where Binance Futures users can select their preferred leverage when trading. And users can go as high as 125x leverage in this update!
During the past month, Binance Futures offered users 20x leverage. With the recent update, you can set the leverage as low as 1x or as high as 125x, with different corresponding margins and tiers depending on the amount of USDT you’ll trade. For further information about the mechanics for each leverage tier, please refer to the following guide.
With this new feature, there’s no better time to sign up for Binance Futures than right now! Make a Binance account now and get a 10% lifetime discount on fees!
Here are 5 things you need to know about this new major upgrade to Binance Futures.
1. Increase your trading position with 125x leverage.
One of the main benefits of trading on Binance Futures is that it is extremely capital-efficient. With the spot market, if you want to trade 1 BTC, you need to have thousands of USDT. But with Binance Futures, you can open a position with a fraction of the cost. And the higher the leverage is, the lower you need to spend on that position.
Let’s say that the current price of Bitcoin is 10,000 USDT (for ease of calculation/willing it into existence). You have 100 USDT, which by itself can only buy you just 0.01 BTC. But if you transfer your 100 USDT onto Binance Futures, you would be able to trade with up to 125x leverage and open a buy/long or sell/short position of as much as 1.25 BTC.
This way, you have a chance to get higher gains that come with having a 1.25 BTC position than if you only bought 0.01 BTC, while using up a smaller amount of crypto for the position you opened.
2. Here’s why 125x can be better than 20x.
Let’s say you had the 100 USDT last week, when leverage was just 20x, instead of this week. (1 BTC was still at 10,000 USDT.) In this scenario, the largest position you would have been able to open would be 0.2 BTC.
Now, let’s say that in both scenarios, you entered a buy/long position. Within an hour, BTC rose from 10,000 USDT to 11,000 USDT. Under the 20x leverage scenario, your 0.2 BTC long position would have netted you a 200 USDT gain, before trading fees (which at Binance Futures, is way lower than the competition). But under the 125x leverage scenario, with a 1.25 BTC position, your profits would go up to 1,250 USDT.
3. Friendly reminder: Be cautious when trading with leverage.
Remember: high reward comes with high risk. Bitcoin’s price can go up and down in a rapid manner, being a highly volatile asset. In the same way that leverage can multiply your gains, it can also compound your risks and potential losses when you open a buy/long position and the market goes down, or when you open a sell/short position and the market goes up.
How much risk are we talking about? There will be a certain price point where your position will be liquidated, and you lose the money you put into that position. Trading with higher leverage means that opening positions are less capital-intensive. For instance, a 10,000 USDT position would only require 80 USDT of initial margin. However, the low initial margin can be a double-edged sword as price volatility can easily exceed margin deposits. As such, traders must ensure sufficient balance in their wallets to avoid liquidation.
Read here for more information about liquidation.
4. No matter your leverage preference, Binance Futures has your back.
As futures trading comes with risk, Binance Futures' main priority is to protect our users and mitigate potential losses. Binance Futures offers stop-loss orders, take-profit-limit orders and other options to close out of your position before reaching the point of liquidation, even when you’re not watching the markets.
Binance Futures aims to bring sustainable crypto-based futures trading to the industry so that users feel safe even when dealing with potentially high risks. Binance Futures leverage trading is powered by a sophisticated risk engine and liquidation model that delivers fast results to users, including many safety features that serve to protect you as much as possible.
5. We delivered customized leverages with zero downtime.
The customized leverage implementation has been delivered with zero downtime impact to the market, which is a huge milestone for the Binance team. We aspire to deliver upgrades and enhancements to the futures trading platform without interrupting trading operations.
And with all the upgrades it has implemented over the past month, it will be a delight to see what happens when the platform continues its momentum.
Risk warning: Buying, selling, holding and partaking in futures trading of cryptocurrencies are activities that are subject to high market risk. The volatile and unpredictable nature of the price of cryptocurrencies may result in significant loss. Binance is not responsible for any loss that you may incur from price fluctuations when you buy, sell, hold and leverage cryptocurrencies.