How does Binance's perpetual futures trading work?

1 answers

• TizzleOzFeb 05, 2025 · 5 months ago
  In Binance's perpetual futures trading, traders can choose their desired leverage, which allows them to control larger positions with a smaller amount of capital. This amplifies both potential profits and losses, so it's important for traders to manage their risk accordingly. The funding rate is another key aspect of perpetual futures trading. It is a mechanism that ensures the price of the perpetual contract stays close to the spot price of the underlying asset. Traders either receive or pay funding fees based on the difference between the contract price and the spot price. This helps prevent market manipulation and keeps the perpetual futures market in line with the spot market. Binance's perpetual futures trading platform also employs a mark price mechanism to prevent unnecessary liquidations. The mark price is calculated based on the spot price and is used to determine whether a trader's position should be liquidated. This helps protect traders from unnecessary liquidations caused by temporary market volatility.
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