Trading on Binance Futures allows traders to use leverage, which can significantly increase their potential profits – but also losses. In this article, we will simply explain how leverage works, what margin means, and what to watch out for when trading.
What is leverage?
Leverage is a tool that allows you to trade with a larger amount than you actually own. If you use 10x leverage, it means that with a capital of 10 USD, you can control a position of 100 USD.
Example:
You have 50 USDT and use 20x leverage → you can open a position of 1,000 USDT.
What is margin?
Margin is the collateral you must deposit to open a leveraged position. It is divided into two types:
Initial Margin – the amount required to open a position.
Maintenance Margin – the minimum amount needed to maintain a position. When you fall below this level, the position will be liquidated.
How does liquidation work?
When the market goes against you and losses exceed your margin, the system will automatically close (liquidate) the position to prevent larger losses.
Example:
You open a long position on BTC with 20x leverage. If the price of BTC drops by just 5%, you could lose your entire margin.
Therefore, it is important:
Setting Stop-Loss
Having proper risk management
Do not use high leverage without experience
Benefits of leverage
The possibility of higher profits even with a small capital
More efficient use of funds
Suitable for scalping or short-term strategies
Leverage risks
Higher volatility = higher risk
Faster losses and potential liquidation
Psychological pressure and stress
Recommendations for beginners
Start with low leverage (e.g., 3x or 5x)
Always trade with a plan and clearly defined SL/TP
Learn technical analysis and watch volumes
Pay attention to Funding Rate and Open Interest
Summary
Leverage is a powerful tool – but like any tool, it depends on how you use it. If you know what you're doing, it can help maximize profits. If not, it can quickly wipe out your account.
Always trade responsibly and with a clear mind.
