What is the breakeven price in futures trading?
On Binance Futures, the breakeven price of a position refers to the price level at which the position would neither make nor lose profit. If the market price of a given asset is equal to the breakeven price of a position, you won’t experience any gains or losses.
How is the breakeven price useful in futures trading?
When trading futures, quickly visualizing the breakeven price of your position can provide you with important information about your risk exposure, allow you to evaluate your performance, and inform your trading strategy.
How to view the breakeven price for your positions in USDⓈ-M or COIN-M Futures on the Binance app?
Before you get started, please activate the Detailed Mode.
1. Log in to the Binance app and go to [Futures]. Tap […] on the top right and choose [Preferences]. Go to [Positions Display Mode] and select [Detailed Mode].
2. Go to one of your open positions and tap [Entry Price]. You’ll see a pop-up window with the breakeven price of that position.
How is the breakeven price calculated?
The Breakeven Price is calculated based on the average entry price of the whole position, including its size and direction. If a trader enters into a position at different price levels or in different quantities, the breakeven price is calculated as the average price of all the entries.
*Funding fee is currently not included in the calculation of the breakeven price on Binance Futures and in the examples below.
To calculate the breakeven price:
Breakeven Price = (Total Cost of Position - Total Gained from Position) / Current Holding Position Size
- Current holding position size refers to the total size of the position, taking into account both the direction (long or short) and the asset quantity.
- Note: the position size value can be negative if the position is short.
For long positions:
- Total Cost of Position: Sum of the cost of all long orders opened in the position.
- Total Gained from Position: Sum of the gain from all short/partially-closed orders in the position.
For short positions:
- Total Cost of Position: Sum of the cost of all closed short orders in the position.
- Total Gained from Position: Sum of the gain from all short orders opened in the position.
It's important to note that the breakeven price in futures is only a theoretical value. The actual trading results may differ due to factors such as slippage, trading fees, funding fees and market volatility.
Example of breakeven price calculation:
Let’s see how to calculate the breakeven price of a position with multiple entries. Assuming you opened the following three long positions and the transaction fee rate is 0.02% on Binance Futures:
- Long BTCUSDT position opened at BTC price of 20,000 USDT, with a size of 0.5 BTC
- Long BTCUSDT position opened at BTC price of 22,000 USDT, with a size of 1.5 BTC
- Long BTCUSDT position opened at BTC price of 25,000 USDT, with a size of 0.5 BTC
The breakeven price for this position will be calculated as follows:
Breakeven Price = (Total Cost of Position) / (Position Size)
= (20,000 * 0.5 + 22,000 * 1.5 + 25,000 * 0.5 + 20,000 * 0.5 * 0.02% + 22,000 * 1.5 * 0.02% + 25,000 * 0.5 * 0.02%) / (0.5 + 1.5 + 0.5)
= 22,204.44 USDT
Now assuming the BTC price moves up to 25,000 USDT, rising above your breakeven price of 22,204.44 USDT. You decide to take some profit and partially close this BTCUSDT position at 25,000 USDT, for a size of 0.5 BTC. Your new breakeven price will then be calculated as:
New Breakeven Price = (20,000 * 0.5 + 22,000 * 1.5 + 25,000 * 0.5 +20,000 * 0.5 * 0.02% + 22,000 * 1.5 * 0.02% + 25,000 * 0.5 * 0.02% + 25,000 * 0.5 * 0.02% - 25,000 * 0.5 ) / (0.5 + 1.5 + 0.5 - 0.5)
= 21,506.8 USDT