In Binance Futures, USDⓈ-M refers to futures contracts margined with stablecoins, mainly with USDT (Tether) or BUSD (Binance USD). This type of contract uses a stablecoin as margin currency, meaning that both the initial margin and profits or losses are calculated and settled in that stablecoin.
Key features of USDⓈ-M contracts:
1. Margin with stablecoins:
You use USDT or BUSD as collateral (margin).
You do not need to own the underlying cryptocurrency, just the stablecoin to trade.
2. Perpetual and traditional futures contracts:
Perpetuals: They have no expiration date, so you can hold the position indefinitely, as long as you have enough margin.
Traditional futures: They have a specific expiration date.
3. Leverage:
They offer adjustable leverage options (for example, up to 125x for some pairs), allowing you to increase your market exposure with a lower initial investment.
4. Settlement and profits:
Profits and losses are calculated and settled in USDT or BUSD, which is useful for maintaining stability compared to using volatile cryptocurrencies as margin.
5. Practical example:
If you trade a USDⓈ-M contract of BTC/USDT, you speculate on the price of Bitcoin but use USDT to open the position.
If you buy a long contract and the price goes up, your profits will be directly reflected in USDT.
Advantages of USDⓈ-M contracts:
Stability: They reduce the impact of volatility because you use stablecoins as a base.
Flexibility: Ideal for traders who prefer to keep their capital in stablecoins.
Ease of use: You do not need to worry about conversions between cryptocurrencies.
Comparison with COIN-M (Contracts with Margin in Cryptocurrencies):
This model is ideal for traders looking to minimize risks related to margin volatility and focus on more predictable trading strategies.
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