Futures on Binance

1. What are Futures?

Futures are financial contracts that obligate parties to buy or sell an asset (in this case, cryptocurrency) at a predetermined price at a future date. On Binance, you can trade cryptocurrency futures, allowing you to speculate on price movements without having to actually own the underlying cryptocurrencies.

2. Leverage (x5, x20, etc.)

Leverage allows you to increase your market exposure using a smaller amount of capital. On Binance, you can choose the leverage level, which is represented by numbers like x5, x20, etc.

3. How Does Leverage Work?

When you use leverage, you are borrowing funds to increase your position. This amplifies both profits and losses. Here is a simplified example:

No Leverage:

You invest $100.

The price of the cryptocurrency rises by 10%.

Your investment is now worth $110.

Profit: $10.

With x10 Leverage:

You invest $100, but trade as if you had $1,000.

The price of the cryptocurrency rises by 10%.

Your investment is now worth $1,100.

Profit: $100 (less financing costs).

Why is it so risky?

Leverage increases both potential profits and losses. If the market moves against you, you could lose more money than you initially invested. Here are some reasons why futures trading with leverage is risky:

If the market moves in the opposite direction to your position, losses are amplified by the leverage factor.

Liquidation: If your losses reach a certain threshold, your position may be automatically liquidated to prevent you from losing more than you invested. This means that you could lose all of your invested capital.

Remember that there is the option of Staking, blocking the movements of your cryptos to earn interest, currently $OM is the crypto that pays the most for staking, almost 20% and has had an increase of more than 3000% in the last year. Greetings!