Many new traders jump into Binance Futures without fully understanding the basics of leverage, asset allocation, and ROI (Return on Investment) — and that can lead to unexpected losses.

Here’s a simple breakdown to help you trade smarter:

What is Leverage in Futures Trading?

Leverage is a multiplier of your actual funds.

When you trade with leverage, you are borrowing extra funds to increase your position size.

For example, 5x leverage means for every $1 you invest, you are controlling $5 in the market.

Higher leverage = higher risks.

Higher leverage also reduces your liquidation distance — meaning the market doesn’t have to move much against you before you lose your position.

> Tip: Most professional traders recommend using no more than 3x to 5x leverage, especially for beginners.

---

How Much of Your Assets Should You Invest?

It’s crucial to decide what percentage of your Futures wallet you want to invest per trade.

Suppose you have $50 in your Futures account.

Best practice: Invest only 1%-5% of your total assets per trade.

If you invest 10% (which is $5), and use 5x leverage, your position size will be $25 ($5 x 5).

Important:

Your remaining $45 acts as your backup to cover any losses, protecting you from liquidation.

---

How is ROI (Return on Investment) Calculated?

In Binance Futures, ROI is based on your invested margin, not the full contract size.

Continuing the example:

You invested $5.

Suppose your trade shows a +50% ROI.

This means you earned 50% of your $5, which is $2.5 — not $25!

Key Point:

Even though you control a $25 position, your profit or loss is based on your initial margin ($5).

---

Best Practices for Stop Loss Settings

Smart traders always use stop losses to protect their accounts:

Set a Stop Loss between 1%-2% of your total Futures account balance.

Example: With $50 in your account, you should risk no more than $0.50 to $1 on any single trade.

This way, a few bad trades won't wipe out your entire account.

Position Example:

Investment: $5

Leverage: 5x

Set stop loss so your maximum loss = $0.50 to $1 (about 10%-20% of your margin).

---

Quick Summary:

Leverage = Multiplier of your funds. Use 3x-5x for safety.

Invest only 1%-5% of your assets per trade.

ROI is calculated on the money you invest, not on the full leveraged amount.

Set a stop loss to limit risk to 1%-2% of your account.

---

#ProTip:

Trading is about survival first, profits second. Manage your risk and protect your capital at all times.

---

#BinanceFutures #CryptoTrading #FuturesTrading$BTC #LeverageTrading #RiskManagement #cryptoeducation #BinanceSquareTalks #CryptoBasics