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Futures trading question

Hi everyone! I am very very new to futures trading and have several questions regarding margins, repayments and etc. Some of these questions may sound dumb, but please consider that I am just starting 🙂

1) When I am trading futures it allows me to leverage up to say 2x just for the sake of simplicity? So for example if I have 20 usdt available on my futures USD M account and if I use that 2x leverage, binance will allow me to buy/long 40$ worth of ADA (just an example) at price of 2$/ADA is that correct?

2) Binance will give me a liquidation price of say 1$. So if the price of ADA drops to 1$ I will automatically get liquidated right? If so my main question now is, how much of my balance will get liquidated? Will I loose the 20$ that I had deposited in my futures account only, or will I also loose another 20$ worth of crypto from my other wallets (spot, margin, earn), to refund that 2x leverage that I used to buy 40$ worth of ADA?

3) If I wont loose anymore money, meaning if I only lose that first deposited 20 usdt deposited in my futures account, how will I repay that 2x leverage that I used to buy 40$ worth of ADA? If I don’t need to repay anything and just lose 20 usdt and thats it, then where is the catch?

I would highly appreciate any help. Thanks a lot in advance!

What do you think?

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3 Comments

  1. If you have 2 quid and go 2x you can buy 40 quid worth. The liquidation price is where your futures contract has dropped by the amount you put in, ie 20 quid. You get liquidated. The exchange gets your 20 quid to cover the difference in the value of the coins they gave you, which were worth 40 when you bought them. They are worth 20 now, so you loose your 20, they get back the 20 quid worth of coins so they are back at 40 quid. Your other wallets won’t be effected, just the money in you futures account.
    Make sure you trade as isolated as then it’s only what you paid in that particular future contact that can be lost. If it’s cross, then the other money in your futures account can be used to cover any looses, so the liquidation price is a lot lower but you can loose more than you put in

    Edit: if you have 20 quid 💷

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