Preparations Before Starting Futures Trading
Before trading perpetual futures on Binance, you need to complete a few preparations:
Activate your futures account: The first time you use the futures feature, Binance will require you to complete a short quiz answering questions about futures trading risks. Once you pass, your futures account is activated.
Transfer funds to your futures account: Futures trading uses a separate futures account. You need to transfer USDT from your spot account to your futures account first.
Navigation path: Go to "Assets" > "Transfer," select from "Spot Account" to "USDT-M Futures Account," enter the amount, and confirm.
Understand the basics: Before opening a position, make sure you understand fundamental concepts like leverage, margin, and liquidation. If you're not clear on these, consider reading related content first.
Choosing a Margin Mode
Before opening a position, you need to select a margin mode. Binance offers two options:
Cross Margin: All available balance in your futures account serves as margin for the position. The advantage is that liquidation is less likely (because the margin pool is large); the disadvantage is that losses from liquidation can be substantial.
Isolated Margin: A fixed amount of margin is allocated to each position. The advantage is risk isolation -- one position's liquidation doesn't affect other positions or remaining funds. The disadvantage is limited margin, making liquidation easier.
Beginners are recommended to use Isolated Margin, as it limits the maximum loss on any single trade.
How to switch: On the futures trading page in the position area, tap the "Cross" or "Isolated" button to toggle. Each trading pair can be set independently.
Setting Leverage
Next to the margin mode, you'll see the leverage setting. Tap it and use the slider or enter a value directly to adjust the multiplier.
Binance perpetual futures support 1x to 125x leverage (maximum varies by trading pair).
Leverage selection guide:
- Beginners: 1-3x
- Intermediate traders: 3-10x
- Professional traders: 10-20x
- Above 20x: Only if you really know what you're doing
The leverage setting applies to the trading pair and persists for subsequent trades on the same pair until you manually change it.
Going Long (Opening a Long Position): Step by Step
Going long means you predict the price will rise -- buy first, sell later to profit from the difference.
Using BTC/USDT perpetual contract as an example:
Step one: Open the Binance App, go to "Trade" > "Futures" > "USDT-M Futures."
Step two: Search for and select "BTCUSDT Perpetual."
Step three: Confirm your margin mode and leverage. Let's say you choose Isolated Margin with 5x leverage.
Step four: In the trading panel below, select the "Buy/Long" direction.
Step five: Choose an order type:
Market order: Simply enter the position amount (in USDT) or contract quantity, and the system opens the position immediately at the best available market price.
Example: Select "Market," enter 200 USDT, tap the "Buy/Long" button. The system uses 200 USDT as margin to open a 5x leveraged long position, controlling a total position value of 200 x 5 = 1,000 USDT worth of BTC.
Limit order: Enter both your desired entry price and quantity. The position only opens when the market reaches your specified price.
Example: Select "Limit," enter a price of 59,000 USDT and the desired quantity, tap "Buy/Long." When BTC drops to 59,000, your long position will be opened.
Step six: Confirm the order details and submit.
Going Short (Opening a Short Position): Step by Step
Going short means you predict the price will fall -- sell first, buy back later to profit from the difference.
The steps are similar to going long, just in the opposite direction:
Steps one through three are the same as going long.
Step four: In the trading panel, select the "Sell/Short" direction.
Step five: Choose an order type and enter parameters.
Market short: Select "Market," enter 200 USDT, tap the "Sell/Short" button. The system uses 200 USDT as margin to open a short position.
Limit short: Select "Limit," enter your desired short entry price and quantity, tap "Sell/Short."
Step six: Confirm and submit.
After successfully shorting, if BTC's price drops, your position profits; if the price rises, your position loses.
Viewing Position Information After Opening
After successfully opening a position, you can see your current futures position information under the "Positions" tab at the bottom of the trading page:
- Entry price: Your average entry price
- Mark price: The reference price used for calculating P&L and liquidation price
- Unrealized P&L: The floating profit or loss of the current position
- ROE: Return on equity calculated based on margin
- Liquidation price: The mark price at which forced liquidation will be triggered
- Margin: The margin amount used for this position
- Position size: The notional value of the contract
How to Close a Position
Closing a position means ending your futures position. There are several methods:
Market close: In the position info, tap the "Close" button, select "Market Close," enter the quantity to close (you can choose to close all or part), and confirm.
Limit close: In the position info, select "Limit Close," enter your desired closing price and quantity. The position closes automatically when the market reaches your price.
Take-profit/Stop-loss close: Set take-profit and stop-loss prices in the position info. The position closes automatically when conditions are triggered.
Close all: If you have multiple positions you want to close entirely, use the "Close All Positions" feature.
Set Take-Profit and Stop-Loss Immediately After Opening
This is a critical habit. Every time you open a position, set take-profit and stop-loss immediately.
In the position info area, tap the "TP/SL" button:
Set take-profit: Enter your target profit price. For example, if you opened a long at 60,000, set take-profit at 63,000.
Set stop-loss: Enter the maximum loss price you can accept. For example, if you opened a long at 60,000, set stop-loss at 58,500.
It's recommended that your take-profit range be at least 1.5 times your stop-loss range, so you can be profitable long-term even with a modest win rate.
Common Mistakes New Traders Make When Opening Positions
Mistake 1: Using excessive leverage. Seeing 125x leverage and wanting to try it, only to get liquidated by a tiny price movement. Start with low leverage.
Mistake 2: Heavy positions in cross margin mode. If positions are too large in cross margin mode and your direction is wrong, you could lose all funds in the entire futures account.
Mistake 3: Not setting a stop-loss after opening. Holding onto the hope that "it'll come back," only to watch losses grow until liquidation.
Mistake 4: Trading against the trend. Going long in a clear downtrend, or shorting in an uptrend. While counter-trend trades don't always lose, the odds are against you.
Mistake 5: Frequent opening and closing. Repeatedly opening and closing positions in a short time causes fees to accumulate rapidly. Every trade should have a clear rationale and plan.
Practice on the Testnet First
If this is your first time with futures trading, it's strongly recommended to practice on Binance's simulated futures trading (Testnet) first.
Simulated trading uses virtual funds with an interface identical to real trading, but without any actual financial risk. Through simulated trading, you can familiarize yourself with the opening and closing process, experience the power and risk of leverage, and test your trading strategies.
Practice in the simulated environment for at least one to two weeks, and only after you have a thorough understanding of the various futures mechanics should you begin trading with real money.