What is Futures Trading?
Futures trading lets traders participate in market movements and potentially profit by going long or short on a futures contract. On Binance Futures, you may also use different leverage levels to reduce risk or potentially amplify profits in volatile markets.
What are long and short in futures trading?
In spot trading, traders can only profit when the value of an asset increases. Futures trading, however, allows traders to potentially profit in both directions–whether the value of an asset rises or falls–by taking long or short positions on a futures contract.
- By going long, a trader buys a futures contract with the expectation that its value will increase in the future.
- Conversely, if a trader anticipates that the contract price will decrease in the future, they can sell a futures contract to go short.
For example, you anticipate that the BTC price is going to rise. You may go long to buy a BTCUSDT contract:
Contract Size | Entry Price | Exit Price | Profit and Loss (PNL) |
1 BTC | 5,000 USD | 5,500 USD | 500 USD |
If you anticipate that the BTC price will fall, you may go short to sell a BTCUSDT contract:
Contract Size | Entry Price | Exit Price | Profit and Loss (PNL) |
1 BTC | 5,000 USD | 4,500 USD | 500 USD |
How to trade on Binance Futures?
1. Log in to your Binance account and go to the USDⓈ-M or COIN-M Futures trading page. If you don’t have a Futures account yet, please refer to How to Open a Binance Futures Account?.
2. Transfer USDT or USDC to your USDⓈ-M Futures Wallet, or other coins (e.g., BTC) to your COIN-M Futures Wallet, as margin.
3. Choose a symbol to trade and select a preferred leverage.
4. Choose an order type and customize the order details. Click [Buy/Long] or [Sell/Short] to place your order.
How to calculate unrealized PNL and ROI%?
USDⓈ-M Futures
Using Mark Price as the price basis:
- Unrealized PNL = Position Size * Order Direction * (Mark Price - Entry Price)
- ROI% = Unrealized PNL in USDT or USDC / Entry Margin = ( (Mark Price - Entry Price) * Order Direction * Size) / (position_amount * contract_multiplier * mark_price* IMR)
- IMR = 1 / Leverage
Using Last Price as the price basis:
- Unrealized PNL = Position Size * Order Direction * (Last Price - Entry Price)
- ROI% = Unrealized PNL in USDT or USDC / Entry Margin = ( (Last Price - Entry Price) * Order Direction * Size) / (position_amount * contract_multiplier * mark_price* IMR)
- Order Direction:
- 1 for long orders
- -1 for short orders
- Order Direction:
COIN-M Futures
Using Mark Price as the price basis:
- Unrealized PNL = position_size * contract_multiplier * Order Direction * (1 / Entry Price - 1 / Mark Price)
- ROI% = Unrealized PNL * Mark Price / abs(Size) * contract_multiplier * IMR
Using Last Price as the price basis:
- Unrealized PNL = position_size * contract_multiplier * Order Direction * (1 / Entry Price - 1 / Last Price)
- ROI% = Unrealized PNL * mark_price / abs(Size) * contract_multiplier * IMR
For more details, please visit:
- Introduction to Binance Futures
- USDⓈ-Margined Futures Contract Specifications
- Binance COIN-Margined Futures Contract Specifications
- A Quick Guide to Coin-Margined Quarterly Contracts
Risk Warning: Futures trading carries substantial risk and the possibility of both significant profits and losses. Past gains are not indicative of future returns. All of your margin balance may be liquidated in the event of extreme price movements. The information here should not be regarded as financial or investment advice from Binance. All trading strategies are used at your discretion and your own risk. Binance will not be liable to you for any loss that might arise from your use of Futures. To learn more about how to protect yourself, visit our Responsible Trading resource page.