Crypto Trading Binance Futures 1 — Questions and Answers
Question 1: Which coin can be used as a margin for a futures contract with a coin margin?
- The foundational resource of this future or illustration. When trading BTCUSD futures, I am able to use Bitcoin as margin. (Correct answer)
- A coined-margined futures wallet contains all of the coins.
- Each and every currency in the USDT-margined wallet
Correct answer: The foundational resource of this future or illustration. When trading BTCUSD futures, I am able to use Bitcoin as margin.
For coin-margined futures contracts, the collateral used as margin is the underlying cryptocurrency itself. For instance, when trading BTCUSD futures, you would use Bitcoin (BTC) as your margin. This means that both your initial margin and any subsequent profits or losses are denominated and settled in the specific cryptocurrency of the contract.
Question 2: Which of the following statements regarding stop-limit orders is accurate?
- After it is placed, the limit order will absolutely be filled.
- Once placed, the limit order will never be filled.
- Once the price reaches the trigger price, the order will be placed at that price. however, the limit order might not always be filled because the most recent market price might differ from the limit price. (Correct answer)
Correct answer: Once the price reaches the trigger price, the order will be placed at that price. however, the limit order might not always be filled because the most recent market price might differ from the limit price.
A stop-limit order is triggered when the market price reaches a specified stop price, at which point a limit order is placed at a predetermined limit price. However, there is no guarantee that this limit order will be filled, as the market price might move past the limit price before the order can be executed. This is especially true in volatile markets where rapid price changes can lead to the order remaining unfilled.
Question 3: Each order has a maximum size allowed. Which kind of action would you take if you saw this kind of error message?
- Continue to try and expect a likelihood of success after many attempts.
- Make numerous smaller orders from the larger one. (Correct answer)
- Continue to try this and blame Binance for your failure.
Correct answer: Make numerous smaller orders from the larger one.
If you encounter an error message indicating that your order exceeds the maximum allowed size, the correct action is to break down the large order into multiple smaller orders. Each of these smaller orders should comply with the platform's size limits. This strategy allows you to execute your intended total trading volume in manageable segments, bypassing the individual order size restriction.
Question 4: Are you aware that following the liquidation of a futures contract. besides the loss of the position, there will also be an Insurance Clear Fee, which can make your futures wallet balance zero?
- Yes, I am aware of the dangers that could result in the balance dropping to zero as well as the presence, computations, and Insurance Clear Fee. (Correct answer)
- No, I'm not sure how the liquidation may make the futures wallet balance zero again.
- No, I'm not aware of how the insurance clear fee is calculated.
Correct answer: Yes, I am aware of the dangers that could result in the balance dropping to zero as well as the presence, computations, and Insurance Clear Fee.
Following the liquidation of a futures contract, traders not only lose their position but may also incur an 'Insurance Clear Fee.' This fee, combined with other liquidation-related costs and potential negative equity, can significantly deplete the futures wallet balance, potentially bringing it down to zero. It is crucial for traders to be aware of these risks and the associated fees.
Question 5: Which of the following is not advised during a sudden price change?
- Reduce the leverage to prevent liquidation
- Utilize market order to enter or exit (Correct answer)
- For Stop Limit orders, use Mark Price as the trigger price.
Correct answer: Utilize market order to enter or exit
During periods of sudden price changes, utilizing market orders to enter or exit positions is generally not advised. Market orders execute immediately at the best available price, which can lead to significant slippage, meaning the actual execution price may be far worse than anticipated. This can result in unfavorable entry or exit points and amplified losses in highly volatile markets.
Question 6: What reference price does Binance Futures use to decide whether to liquidate a position?
- Last Price
- Mark Price (Correct answer)
- Price average over the previous hour
Correct answer: Mark Price
Binance Futures, like many other derivatives exchanges, uses the Mark Price to determine whether a position should be liquidated. The Mark Price is a calculated value derived from multiple data points, including the spot index price and funding rates, designed to prevent manipulation and reduce unnecessary liquidations caused by temporary fluctuations in the Last Price.
Question 7: Which of the following can a user do if he or she has open orders or positions?
- Change to isolated margin mode or cross margin mode
- Utilize the cross collateral function to borrow. (Correct answer)
- Change to the one-way or hedge modes
Correct answer: Utilize the cross collateral function to borrow.
If a user has open orders or positions, they can often utilize the cross collateral function to borrow additional funds. This feature allows traders to use assets held across different accounts or wallets as collateral for new loans, thereby increasing their borrowing capacity without needing to close existing positions. Other actions like changing margin modes might be restricted with active positions.
Crypto Trading Binance Futures 1
Which coin can be used as a margin for a futures contract with a coin margin?