🏧Binance futures trading 101: 2025
leverage and margin are related but distinct concepts that help you trade with more funds than you actually have. Here’s a simple breakdown:
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• Leverage: This is the "borrowing power" Binance gives you to increase your trading position. For example, if you have $1,000 and use 10x leverage, you can trade as if you had $10,000. It amplifies your potential profits (and losses). Think of it as a multiplier for your money.
• Margin: This is the actual money you put up from your own account to open a leveraged position. It’s like a deposit or collateral. Using the same example, with $1,000 and 10x leverage, your $1,000 is the margin. Binance lends you the extra $9,000 to make the $10,000 position.
Key Difference
• Leverage is the multiplier (e.g., 10x, 20x) that determines how much you can borrow.
• Margin is the initial funds you provide to access that borrowed amount.
Example
You have $500 and want to trade with 5x leverage on Binance futures:
• Leverage: 5x means you can trade with $2,500 ($500 x 5).
• Margin: Your $500 is the margin, and Binance loans you the extra $2,000.
Why It Matters
Leverage increases your buying power but also your risk—if the market moves against you, losses are magnified, and you might lose your margin.
