In recent news, Binance Futures will reportedly launch USDT-margined LPT perpetual contracts with up to 25x leverage on 2021-11-11 03:30 AM. LPT perpetual contracts are futures contracts with a USDT margin and USDT as collateral. Users will be able to choose from 1 to 25 x leverage.

Ahead of the launch, here are a few things to note about futures trading.

What are Crypto Futures?

Crypto futures allow traders to obtain access to digital currencies without having to own any of the underlying assets.

It’s comparable to stock indices or commodity futures contracts, in which an investor can speculate on an asset’s future value. The value of cryptocurrency futures contracts is derived from a specific cryptocurrency, such as Bitcoin or Ethereum. When trading futures, you do not have any digital assets. When a crypto futures contract expires, the trader is expected to spend cash instead of dealing in cryptocurrency. The most important feature of crypto futures trading is that it safeguards against price fluctuations and severe volatility in cryptocurrency.

On derivative trading platforms like Binance Futures, crypto futures can be traded. Crypto futures are traded 24 hours a day, seven days a week, just like spot trading. Because of the extreme volatility of derivatives trading, traders must manage their risks carefully, and it’s critical to understand the fundamentals of crypto futures before investing.

Leverage

Traders are drawn to the futures market by the allure of leverage. Futures trading is particularly capital-efficient due to the leverage provided. To acquire one bitcoin on the spot market, for example, one would need $66,539.90.  You can open a BTC futures position for a fraction of the cost with a futures contract. This is only feasible if you employ leverage. You can invest less money into a position if you have more leverage. Spot trading, on the other hand, does not allow for leverage. Assume your spot wallet contains only USDT 5,000. You could only afford USDT 5,000 in Bitcoin in this case.

Margin

To open a futures position, you’ll need an initial margin. When using a futures trading account, the initial margin is the percentage of the notional value of a futures position that must be covered by cash or collateral. Maintenance margin, on the other hand, is the minimum amount required by investors to keep their trading positions open. Maintenance margin checks are performed regularly and aid in the calculation of margin utilization. A trader’s position is liquidated when his maintenance margin limit is reached.
The Maintenance Margin is normally half of the Initial Margin on most exchanges. The Maintenance Margin at Binance, on the other hand, is less than half of the Initial Margin, which is more advantageous to traders.