This post is a crypto trading guide for Binance margin trading, including a review of the Binance leveraged tokens.
Margin trading is a way to buy crypto assets on the spot market with borrowed funds to achieve leverage.
We will go through
- Binance Margin Trading Fees
- What is Binance margin trading with a calculation example
- How to open a Binance margin trading account
- Cross margin VS Isolated margin
- Binance margin liquidation process
If you are interested in other features on the Binance trading platform, you should read our Binance review.
Margin Trading Fees Explained
Margin trading consists of several different trading fees. See the table below for a summary and description of each.
- Spot market trading fee (maker and taker).
➤Compare exchanges with the lowest crypto spot trading fees.
- Margin borrow interest fee (The margin interest fee differs for each cryptocurrency you borrow).
Binance Spot Market Trading Fees
VIP, BNB Balance, and Volume: You can achieve higher 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 costs by 25% if you pay them with BNB.
BTC: The daily 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 2023-02-01. The fee is announced as a daily fee but is charged hourly and therefore should be divided by 24.
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.
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
- 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
Current total exposure is now: 3x $9.000 = $27.0000
Margin level: $27.000 / $20.000 = 1.35
How to start trading with margin trading at Binance?
There are a few steps you need to accomplish before you can start with margin trading at Binance.
- Sign up with Binance and open a Binance margin account
- Transfer collateral to your Binance margin account
- Auto-borrow trade
- Auto-repay trade
1. Sign up with Binance and open a Binance margin trading account
- Sign up with Binance
- Login to your Binance account
- Click on BTCUSD on the first screen, look for Trade in the header menu, and click Margin.
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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, you 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 isolated margin and cross margin?
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.
What does this mean?
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
Let’s say you also buy 1 ETH for $1.000 each with 3x leverage. This gives you a total ETH exposure of $3.000
Now, the Bitcoin price rises to $11.000, and the Ethereum price decreases 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
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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.
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.
Binance Leverage Trading Alternatives
Futures trading offers you to use higher leverage with more risk. Also, remember that futures do not follow the spot price.
In addition, Binance is offering leveraged tokens which are more for beginners looking to try to invest with leverage the first time. There is no liquidation risk, but you might want to double-check all the fees before you start trading with the leveraged tokens.
No leverage trading is for long-term investment since you are paying interest on the borrowed funds, and there is also a risk of volatility decay.
Binance Margin Trading VS Leveraged Tokens
Margin Trading VS Futures Trading
Binance margin trading allows for 3x-10x leverage trading while Binance futures trading allows for up to 125x.
However, if you are looking for more exotic markets, Binance margin trading gives access to many more markets than Binance Futures.
Make sure you understand the differences in price setting, trading fees, and expiration date.
Read our article about the Crypto Derivative Exchange with Lowest Fees for Futures and Perpetuals Trading.
Binance Margin Trading VS Kucoin Margin Trading
Binance and Kucoin are both top Bitcoin and altcoin crypto exchanges.
Margin trading is available on both exchanges and they both charge low fees. However, there are some differences.
For example, Kucoin offers 5x cross-margin leverage and 10x isolated leverage. Kucoin also has more listed markets (160+). Read the full article about Kucoin margin trading.