Binance Margin Trading VS Futures Trading Fees and Markets

Binance Margin VS Futures Trading Fees and Markets

Binance Margin VS Futures Fees

  • Binance Margin trading lets you use borrowed money to trade cryptocurrency from the spot market with leverage.
  • A Futures Contract is an agreement to buy or sell the underlying asset at a predetermined price in the future and trade in the futures markets.
  • Binance margin and futures trading fees consist of several different fees.
  • Its possible to get Binance trading fee discount via VIP tier levels, the BNB coin, referral code and 

Binance Margin VS Futures Trading

Binance Margin VS Futures Trading Comparison Table

Margin Traders place orders to buy or sell cryptos in the spot market. This means that margin orders are matched with orders in the Spot Markets. All margin-related orders are Spot orders. 

While trading Futures, traders place orders to buy or sell contracts in the derivatives market. In summary, Margin and futures trading are in two different markets.

Spot Leverage Margin Trading

Users borrow funds from Binance in Margin Trading to increase their trading power. The loan’s interest rate is calculated for each hour and repaid upon closing the position. Traders must ensure their assets are sufficient to cover the borrowed funds and avoid liquidation if their position value drops below a certain threshold.

Futures Leverage Trading

Futures Trading utilizes a concept called maintenance margin, where users pledge collateral in exchange for the ability to trade futures contracts. Unlike Margin Trading, there is no repayment in Futures Trading. However, traders must maintain sufficient collateral to avoid margin calls if the value of their futures contracts declines.

Trading Fees

Both Margin Trading and Futures Trading incur trading fees. Margin Trading fees are identical to Spot Trading fees, while Futures Trading fees has another fee schedule.

Funding Rate in Perpetual Futures

Perpetual Futures contracts are designed to converge in price with the underlying asset. To achieve this convergence, a mechanism called the funding rate is employed. 

The funding rate is periodically paid or received by traders based on the difference between the Perpetual Futures price and the underlying asset’s price. This funding rate incentivizes traders to keep the Perpetual Futures price in line with the underlying asset’s price.

Binance Margin Trading Fees

➤Margin trading uses spot trading fees. However, also remember that there are additional fees for borrowing capital since you use leverage.

Compare all the lowest crypto spot trading fees.

VIP, BNB Balance, and Volume: You can achieve higher Binance VIP levels by your 30-day rolling trading volume or by holding BNB.

*Maker/Taker: Trading fees are charged for each VIP level. You can reduce the Binance spot margin fees by 25% if you pay them with BNB.

BTC: The yearly margin interest fee for borrowing BTC for margin trading. ETH has similar fees, but small altcoins can have a much higher daily margin interest fee. The daily margin borrowing interest rate will change with the market, and the above number is just a snapshot from 2023-11-22. The fee is announced as a yearly fee but is charged hourly and therefore should be divided by 365 days and 24 hours.

Binance Futures Fees

➤Binance charges futures trading fees for USDT-m and COIN-M futures and perpetuals.

How do you get lower futures trading fees on Binance?

VIP level by Trading volume or BNB balance: Reach a higher Binance VIP tier level by reaching a specific 30-day trading volume or keep a certain BNB balance to reach a higher VIP tier level.
Pay your fees with the BNB coin: Get a 10% discount on Binance futures trading fees.: 
Discount Code: Sign up for a 10% futures trading fee rebate with our referral discount code. In addition, you will get a 20% trading fee discount on spot trading fees.

See the full table of futures fees and compare all the lowest crypto futures fees.

What is Binance Margin Trading?

Margin trading, or leverage trading, amplifies trading results in both directions. This results in more significant potential profits but higher risk.

Exclamation sign for risks associated with shorting Bitcoin on Binance

Read more about crypto trading risk management.

Binance is an excellent exchange for margin trading since it has among the lowest crypto spot trading fees and meager daily margin interest fees.

Also, Binance margin trading lets you trade with 3x-10x leverage. 

How often does Binance charge margin fees?

Binance’s margin account interest rate is charged and calculated hourly.

However, it´s announced as a daily interest. If the daily interest rate is 0.02%, the hourly interest rate is calculated as 0.02%/24.

The fee is paid per hour started according to this formula:

I (interest) = P (borrowed money) * R (daily interest 0.02%/24) * T (in hours)

Binance Margin Trading Calculation Example

Mini Electronic Calculator

Let’s say you have $10.000, and the Bitcoin price is $10.000. So you want to buy 1 Bitcoin with a 3x margin.
  • Collateral: What you put in from the beginning. If you buy 1 BTC for $10.000 and use 3x leverage, your collateral is $10.000, and your total initial exposure is 3 Bitcoin ($30.000).
  • Margin Level: (Current total exposure / Borrowed amount) =  $30.000/$20.000 = 1.5

Let’s say the Bitcoin price drops to $9.000, what would be your margin level?

Current total exposure is now: 3x $9.000 = $27.0000
Margin level: $27.000 / $20.000 = 1.35

 
See table for Binance margin levels for 3x leverage further down in this post.

How do you start trading with margin trading at Binance?

You need to accomplish a few steps before beginning margin trading at Binance.

Here are the main steps further described in detail.

1. Sign up with Binance and open a Binance margin trading account

  1. Sign up with Binance
  2. Login to your Binance account
  3. Click BTCUSD on the first screen, look for Trade in the header menu, and click Margin.

2. Transfer collateral on Binance margin trading

Once you are on the margin trading screen, you can transfer collateral.

First, ensure you are in the margin trading screen by checking that Cross 3x or Isolated 10x is colored yellow.

If Spot is marked with yellow, you will not see the transfer options since you are on the spot trading screen.

Click on any of the red squares in the screenshot below, and you will get a popup in Binance where you can enter the information about your transfer.

3. Auto-borrow trade

Now you are ready to trade.

If you are about to go long on BTC, click Borrow under Buy BTC.

  • In the price field: Set the limited price you are willing to pay per Bitcoin.
  • In the amount field: Set your total amount of BTC to buy. This can be a maximum of 3x what you have in your USDT wallet.

4. Auto-repay trade

When you are ready to close your trade, go to the right column under Sell BTC (if your initial order was Buy BTC).

Here, you mark repay.

Set the price you are willing to sell your BTC for.

Set how many BTC you are willing to sell in the amount field.

Does Binance have an isolated margin and cross margin?

Yes.

  • For isolated margin, borrowing, trading, and risk management functions are included in an independent isolated margin account.
  • For cross-margin, each user can only open one cross-margin account where borrowing, trading, and risk management functions are available.

What is Binance Cross Margin 3x?

In Binance cross-margin mode, the margin is shared across the user’s account. You can only have one Binance cross-margin account.

Binance Cross Margin 3x Calculator

  • Let’s refer to the Binance margin trading example above.
  • In that example, you bought 1 Bitcoin for $10.000 with 3x leverage to get an initial total exposure of $30.000
  • You also buy 1 ETH for $1.000 each with 3x leverage. This gives you a total ETH exposure of $3.000
  • The Bitcoin price has risen to $11.000, and the Ethereum price has decreased to $900.
  • What is your margin level with cross margin?
  • Margin level with cross margin: ($33.000+$2.700) / ($20.000+$2.000) = 1.62

Binance Margin Levels for 3x Leverage

Binance Referral Code: -20% on all commissions with our link

What is Binance Isolated Margin 10x?

In isolated margin mode, the margin is independent in each trading pair:

Each trading pair has a separate isolated margin account. Only specific cryptocurrencies can be transferred in, held, and borrowed in one isolated margin account. 

For instance, in BTCUSDT isolated margin account, only BTC and USDT are accessible. You may open several isolated margin accounts.

Binance Isolated Margin 10x Calculator

In the example above, under the Binance cross margin section, we can calculate the isolated margin instead.

Isolated margin level for Bitcoin: $33.000/$20.0000 = 1.65

Isolated margin level for Ethereum: $2.700/$2.000 = 1.35

What is Binance margin liquidation?

If your margin level drops to 1.1, your assets will be automatically liquidated, meaning Binance will sell your funds at market price to repay the loan.

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