The question of how to make Bitcoin leverage trading on Binance has been asked quite often lately. We have done detailed research on Bitcoin leverage trading on Binance for you. Keep reading!
Leverage is the process of making much higher volume transactions with very little capital in the crypto money sector. Investors can find up to 125x maximum leverage support for Bitcoin in futures trading on Binance. You can choose your leverage for Bitcoin from the button on the transaction screen in the menu of the Binance futures. Also, you can easily adjust your preference between 1x and 125x.
The leverage feature in Binance futures can be used in almost all price expectations. As an investor, if you think that the prices will rise or fall, you can open your positions at any leverage ratio.
If the Bitcoin price rises thanks to the transactions you will open using the leverage process, you can double your profits in the leverage ratio. You can also manually set your leverage for Bitcoin on Binance futures.
In the Bitcoin leverage system, as the height of the position increases, your leverage ratio will also decrease. Similarly, as your position begins to shrink, the leverage ratio you can use will increase. Using high leverage will risk greater liquidity. So you should be extremely careful when using the leverage system, especially if you are inexperienced. Now let’s answer the question of what is liquidity?
What is Liquidity?
In this section, we should mention the term liquidity in short. Liquidity happens when there is a market movement opposite to any position you open. First, the total amount of money you use when opening your leveraged transaction for Bitcoin is called initial collateral. Maintenance collateral is the minimum amount of collateral that must be in your account to keep your positions open. If your collateral balance falls below this level, you will receive a call to complete the collateral. To keep your position open, you need to deposit money into your account. Otherwise, all money in your account will be transferred under the contract and you will be bankrupt. This situation is called liquidity.
For example, in Bitcoin, which is worth $ 100 to $ 10, suppose you open a 10x leveraged transaction. With leverage, you’ll be able to trade $ 1,000 in total. Using the leverage process, you borrowed $ 900. The maximum damage you can get in this transaction is $ 100, which is your starting price. Because only $ 100 of $ 1,000 belongs to you.
Suppose the price of the Bitcoin you bought drops to $ 9. Based on the spot market, your loss will be 10%, which is $ 1. However, since you prefer 10x leverage in your futures, your money will decrease from $ 1000 to $ 900 in case of a 10% regression. You will incur a loss of $ 100, which is your initial collateral. In this case, you can add a maintenance margin to your account and keep your position open. Otherwise, the position will be closed completely and you will lose all your money and become liquid.
How To Trade Bitcoin Leverage on Binance?
When you want to do Bitcoin leverage trading on Binance, your balance will be increased by the leverage you have chosen. For example, imagine you have a 0.10 BTC balance. If you use 10x leverage then it will mean that you can trade 0.1 x 10 = 1 BTC. As you increase the leverage, your profit will increase, but remember that the risk will increase as well!
When you enter the Bitcoin rate you want to sell or buy from the order entry section on the right side of the screen, right after you set your leverage rate, the required transaction price is automatically calculated according to the leverage rate you have chosen. For example, let’s consider the Bitcoin / USDT pair. If you think the price of Bitcoin will increase, you should open a transaction with the buy, and if you think that the price will decrease, you should open a transaction with sell. If you have entered in both directions, you can take your profit by closing your position completely at the price you have determined. Here are the leveraged trading steps for Bitcoin on Binance:
First of all, you need to have a membership account on Binance’s official website. If you are not yet a Binance member, you can sign up now.
⦁ Now it’s time to find the page about leverage. First, enter the Binance futures link.
⦁ The Binance trade screen will appear on your screen. In this section, there will be information about Binance futures transactions that involve serious risks, that they may suffer high losses due to sudden movements in prices, and that this transaction is restricted for citizens of some countries.
⦁ Now, you will be faced with a small quiz on whether you are aware of all financial-based risks. When you complete the exam by ticking the options, the correct answers will be displayed automatically. You must complete the test by correcting the wrong answers again.
⦁ After this step, your leverage account is opened. The final step is to transfer funds from your Spot wallet to your Futures account. That’s it for the transactions!
What is the Meaning of 5x, 10x on Binance?
You see a lot of images such as Binance 5x, 10x, or 125x, especially on social media. You can see the ‘X’ expressions next to the numbers on both Binance margin and Binance futures on the Binance exchange. The numbers indicate the size of the leverage.
The first to come across will be the Binance 2x expression. You can open short and long positions for Bitcoin by choosing the 2x leverage feature in the Binance Futures section. For example, when we think that you have a balance of $ 300, you will use the 2x leverage feature for Bitcoin to perform your transaction as if you were doing it with $ 600.
You can also use 3x leverage using Binance 3x trading. Binance 5x means it has 5x leverage. Binance 10x, 20x, 50x, 100x and 125x are similar.
You can open both long and short positions with Bitcoin on the platform by using any amount of leverage in the menu of the Binance futures. Don’t forget that the profit and loss ratios will be at the same level in all these applications. Most traders focus only on the profit side of the leverage system and ignore the loss side. However, just as there is a 10x chance of your profit, your loss is also 10x.
In the menu of the Binance futures, you trade balances that aren’t actually in your wallet. This system, which is also known as opening a transaction by borrowing, is unfortunately extremely risky because it is in debt. Therefore, if you aren’t particularly experienced in the sector, get help while trading.