BINANCE Futures & Perpetual Contracts Guide - Delta Exchange

What is BNB Futures Trading?

BNB Futures is an agreement between two parties to buy or sell BNB at a predetermined future date and price. The futures contract derives its value from the underlying cryptocurrency, BNB in this case. Thus the price of a BNB futures contract moves broadly in sync with the price of BNB.

Trading futures is thus an alternative to actually buying or selling the underlying crypto (aka spot trading). In spot trading, you can make profit by buying BNB low and selling it at a high price. This trade however works only in a bull market, i.e. when BNB price is going up. However, in a bear market, there is no trade possible in spot trading. Furthermore, leverage trading is not possible in spot trading.

Trading BNB through futures offers several advantages over spot trading of BNB, namely ability to both long or short and get access to leverage.

Trade profitably in all market conditions

You can profit from rising BNB price by going long BNB futures. And, when BNB price is falling, you can make profits by going short. This feature of futures trading enable you to navigate all types of market conditions profitably. Compare this with directly buying BNB. When price is falling, you can either sell your BNB or suffer losses. In spot trading, there is no way of profiting from falling prices.

Hedge Price Risk

If you are a HODLer, you can still use futures to mitigate price risk. Say, you hold BNB. You can mitigate the risks you face when BNB is falling by going short BNB futures. In this case, a short futures position acts as a downside protection by effectively locking the $ value of your portfolio without the need for selling your BNB. Judicious use of futures as hedge can make you a better and stronger HODLer.

Amplify trading gains with leverage

Leverage enables you to open positions that are bigger than your trading capital. If you can open a position that is 10 times bigger than your trading capital, then you have 10x leverage available to you. The maximum allowed leverage for futures listed on Delta Exchange is as high as 100x. There are two ways of thinking about leverage:

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  Leverage as capital efficiency driver: For opening a position of a given size, higher the leverage lower the trading capital required. The leverage in spot trading is always 1x, while it is 3-4x in margin trading. This means futures is 20 to 100 times more capital efficient than spot or margin trading.

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  Leverage as a returns amplifier: Because in a leverage trade position size is greater than the capital deployed, impact of prices moves gets magnified. The return on capital deployed is leverage times the price return. This means that you can amplify your trading gains the effective use of leverage.

If BNB increased from $0 to $0 your return would be equal to:

+1.25%Without leverage+12.5%With 10x leverage+25%With 20x leverage+31.25%With 25x leverage