Crypto Trading Binance Futures 2 — Questions and Answers
Question 1: In Binance USDⓈ-M Futures, what does the 'Margin Ratio' represent?
- Maintenance margin divided by margin balance (Correct answer)
- Total wallet balance divided by leverage
- Unrealized PnL divided by entry price
- Position size divided by available balance
Correct answer: Maintenance margin divided by margin balance
Margin Ratio equals maintenance margin divided by margin balance, and liquidation is triggered when it reaches 100%.
Question 2: What is the key difference between Cross Margin and Isolated Margin modes?
- Cross shares the whole balance across positions while Isolated limits margin to one position (Correct answer)
- Cross uses higher fees than Isolated
- Isolated allows hedging while Cross does not
- Cross disables stop-loss orders
Correct answer: Cross shares the whole balance across positions while Isolated limits margin to one position
Cross Margin uses the entire futures wallet balance to avoid liquidation, while Isolated Margin caps risk to the margin assigned to that single position.
Question 3: On Binance Futures, what does a positive funding rate mean for an open position?
- Longs pay shorts (Correct answer)
- Shorts pay longs
- Binance pays all traders
- No payments occur
Correct answer: Longs pay shorts
A positive funding rate means long position holders pay short position holders.
Question 4: What is the maximum leverage typically available on major Binance USDⓈ-M perpetual contracts like BTCUSDT for new accounts?
- 125x but reduced by tiered limits (Correct answer)
- 1000x
- Exactly 50x fixed
- 5x only
Correct answer: 125x but reduced by tiered limits
Binance advertises up to 125x on flagship pairs, though leverage is capped lower as position size grows and for newer accounts.
Question 5: What is the purpose of the 'Mark Price' on Binance Futures?
- To calculate unrealized PnL and prevent unfair liquidations (Correct answer)
- To set the maximum order size
- To determine trading fees
- To lock the funding rate
Correct answer: To calculate unrealized PnL and prevent unfair liquidations
Mark Price is based on an index of spot prices and is used for liquidations and unrealized PnL to avoid manipulation from temporary last-price spikes.
Question 6: What does 'ADL' (Auto-Deleveraging) do on Binance Futures?
- Closes profitable opposing positions when the insurance fund cannot cover a bankruptcy (Correct answer)
- Automatically increases your leverage
- Adds margin to losing positions
- Cancels all open orders at expiry
Correct answer: Closes profitable opposing positions when the insurance fund cannot cover a bankruptcy
Auto-Deleveraging closes counterparty positions ranked by profit and leverage when the insurance fund is insufficient to absorb a liquidation.
Question 7: What is the main difference between Binance USDⓈ-M and COIN-M futures?
- USDⓈ-M is margined and settled in stablecoins while COIN-M uses the underlying crypto (Correct answer)
- COIN-M has no leverage
- USDⓈ-M contracts always expire weekly
- COIN-M is only for stablecoins
Correct answer: USDⓈ-M is margined and settled in stablecoins while COIN-M uses the underlying crypto
USDⓈ-M contracts are collateralized and settled in USDT/USDC, whereas COIN-M contracts are collateralized and settled in the base cryptocurrency.
Crypto Trading Binance Futures 2
In Binance USDⓈ-M Futures, what does the 'Margin Ratio' represent?