Binance is one of the world’s largest and most popular cryptocurrency exchanges. Among its many offerings, Binance Perpetual Contracts stand out as a powerful tool for traders seeking exposure to crypto price movements without expiration dates. Unlike traditional futures, perpetual contracts allow traders to maintain long or short positions indefinitely — as long as margin requirements are met.
But how exactly do you use Binance perpetual contracts? This comprehensive guide walks you through the essentials of contract trading on the Binance app, covering core concepts like leverage, margin modes, order types, and risk management — all tailored for beginners in 2025.
What Is a Perpetual Contract?
A perpetual contract is a type of futures contract with no expiration date. This unique feature makes it ideal for traders who want to hold long or short positions without worrying about rollover or settlement.
Perpetual contracts are typically used to speculate on the price of major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and other leading altcoins. They are traded with leverage, meaning you can control a larger position using a smaller amount of capital.
While this increases profit potential, it also amplifies risk — making it essential to understand how these contracts work before diving in.
Key Features of Perpetual Contracts
- No Expiry Date: Unlike standard futures, perpetuals don’t expire. You can hold your position indefinitely.
- Leverage Trading: Binance allows users to open leveraged positions, increasing both gains and losses.
- Funding Rate Mechanism: Ensures that the contract price stays close to the underlying spot price by transferring funds between long and short traders every 8 hours.
👉 Start practicing risk-free trading strategies today.
Perpetual Contracts vs. Traditional Futures
While both perpetual and traditional futures derive value from an underlying asset, they differ significantly:
| Feature | Traditional Futures | Perpetual Contracts |
|---|---|---|
| Expiration | Yes – fixed settlement date | No – open-ended |
| Settlement | Physical or cash delivery | Cash-settled only |
| Holding Period | Limited | Unlimited (with sufficient margin) |
In crypto markets, perpetual contracts dominate due to their flexibility. On Binance, when you trade a BTCUSDT perpetual contract, you're not buying Bitcoin itself — you're speculating on its price movement. Profits and losses are settled in stablecoins (like USDT) or the base coin (like BTC), depending on the contract type.
This "virtual" nature offers greater trading agility and eliminates concerns about custody or delivery.
Understanding Leverage and Margin
Before placing your first trade, it's crucial to grasp two foundational concepts: leverage and margin.
Leverage: Amplify Your Position Size
Leverage allows you to control a large position with a relatively small amount of capital. For example:
- With 10x leverage, $100 controls a $1,000 position.
- With 50x leverage, $100 controls a $5,000 position.
While high leverage can boost returns, it also increases the risk of liquidation.
⚠️ Beginner Tip: Avoid high leverage initially. A 10x leverage means a 10% adverse move wipes out your entire margin. At 50x, just a 2% move triggers liquidation.
Types of Margin
- Initial Margin: The minimum capital required to open a leveraged position.
- Maintenance Margin: The minimum equity needed to keep a position open. Falling below this level triggers automatic liquidation.
For instance, if you open a $1,000 position with $100 margin (10x), that $100 is your initial margin. If losses reduce your equity below the maintenance threshold, Binance will close the position automatically.
You can add more funds (add margin) to avoid liquidation during volatile swings.
Going Long vs. Going Short
Perpetual contracts give you two primary strategies:
Going Long (Buy)
- When to use: When you expect the price to rise.
- How it works: Buy low → Sell high.
- Example: Buy BTC at $60,000; sell later at $65,000 → Profit from upward movement.
Going Short (Sell)
- When to use: When you anticipate a price drop.
- How it works: Sell high → Buy back low.
- Example: Short BTC at $65,000; buy back at $60,000 → Earn $5,000 per BTC.
Shorting enables profit even in bear markets and serves as a hedge against your existing crypto holdings.
Contract Types: USDT-Margined vs. Coin-Margined
Binance offers two main types of perpetual contracts:
USDT-Margined Contracts
- Denoted as BTCUSDT, ETHUSDT, etc.
- Uses USDT (or other stablecoins) as collateral and settlement currency.
- All profits/losses shown in stablecoin value (e.g., +$150).
- Ideal for traders focused on stable profit tracking.
Coin-Margined Contracts
- Denoted as BTCUSD_250328, etc.
- Uses crypto assets like BTC or ETH as margin.
- P&L is reflected in the number of coins (e.g., +0.02 BTC).
- Suited for long-term holders who want to accumulate more of a specific asset.
💡 Note: Coin-margined contracts carry higher effective leverage and risk. Not recommended for beginners.
Margin Modes: Cross vs. Isolated
Your choice of margin mode affects risk exposure across multiple positions.
Cross Margin Mode
- All positions share the same margin pool.
- Gains from one trade can offset losses from another.
- Higher capital efficiency but greater systemic risk — a losing trade can drain your entire account.
✅ Best for experienced traders managing diversified portfolios.
Isolated Margin Mode
- Each position has its own dedicated margin.
- Losses are capped at the allocated margin for that trade.
- Prevents one bad trade from affecting others.
✅ Recommended for beginners and high-leverage strategies.
👉 Learn how top traders manage risk using isolated margin techniques.
Key Prices in Contract Trading
Understanding these three prices helps prevent unexpected liquidations:
1. Mark Price
- Used by Binance to calculate unrealized P&L and trigger liquidations.
- Based on index price + funding rate adjustments.
- Prevents manipulation during flash crashes.
2. Index Price
- A weighted average of BTC/ETH prices across major spot exchanges.
- Reflects fair market value and avoids single-exchange anomalies.
- Not visible in the mobile app — check desktop version.
3. Last Traded Price
- The most recent actual trade executed on the futures market.
- Can deviate significantly from spot price during high volatility.
🔍 Always monitor the mark price — it determines when your position gets liquidated.
Funding Rate Explained
Since perpetual contracts have no expiry, the funding rate keeps them aligned with spot prices.
Every 8 hours (at 00:00, 08:00, 16:00 UTC), Binance transfers funds between longs and shorts:
- Positive rate: Longs pay shorts → Indicates bullish sentiment.
- Negative rate: Shorts pay longs → Signals bearish bias.
Example: If funding rate is +0.01%, holding a $10,000 long position costs $1 every 8 hours.
📌 Pro Tip: Monitor funding trends. Extremely high positive rates may signal overbought conditions — a potential reversal clue.
Essential Order Types for Beginners
Market Order
- Executes instantly at current market price.
- Guaranteed fill but may suffer slippage in fast-moving markets.
- Higher fees (Taker rate applies).
Limit Order
- Set your desired entry or exit price.
- Only executes when market reaches your level.
- Lower fees if filled as Maker (passive order).
✅ Use limit orders for precise entries and better cost control.
Advanced Contract Features
These tools enhance control and reduce errors:
Post Only (Maker Only)
Ensures your limit order never becomes a taker — maintaining lower fees. If immediate execution would occur, the order is canceled instead.
Ideal for liquidity providers aiming to earn rebates.
Time-in-Force (TIF) Options
Control how long or under what conditions your order remains active:
- GTC (Good Till Cancelled): Stays active until filled or manually canceled.
- IOC (Immediate or Cancel): Partial fills allowed; unfilled portion canceled instantly.
- FOK (Fill or Kill): Must fill entirely or be canceled — no partial execution.
- GTD (Good Till Date): Set custom expiration time for your order.
Use IOC/FOK for fast execution; GTC/GTD for strategic entries.
Reduce Only
Prevents accidental position increases. Orders with this option will:
- Close part or all of an existing position.
- Be rejected if they add to or reverse the current direction.
Useful when managing complex multi-position strategies.
Partial vs. Full Close
- Full Close: Instantly exits the entire position at market price.
- Partial Close: Let you manually specify how much to close — useful for scaling out of trades gradually.
Both options update your liquidation price and margin ratio dynamically.
Binance Contract Fees & Costs
Binance offers competitive fee structures:
| Type | Maker | Taker |
|---|---|---|
| U-Margin Perp | 0.02% | 0.05% |
| Coin-Margin Perp | 0.025% | 0.075% |
Using BNB pays fees with a 10% discount.
Additionally:
- Funding fees apply every 8 hours.
- Withdrawal fees vary by network.
Always factor in total cost — including funding — when evaluating profitability.
Frequently Asked Questions (FAQ)
Q: Can I lose more than my initial investment in perpetual contracts?
A: No. Binance uses automatic liquidation to prevent negative balances. Your maximum loss is limited to your margin.
Q: What happens during forced liquidation?
A: When equity drops below maintenance margin, Binance closes the position at mark price to prevent further losses.
Q: How often does funding occur?
A: Every 8 hours — at 00:00, 08:00, and 16:00 UTC.
Q: Is isolated margin safer than cross margin?
A: Yes. Isolated limits risk per trade, protecting your overall account from cascading losses.
Q: Can I change margin mode after opening a position?
A: Yes — tap the “Edit” button next to your position to switch between isolated and cross mode.
Q: Where can I see historical funding rates?
A: Go to [Binance Futures > Funding History] on desktop or app.
Final Tips for Beginners
- Start with low leverage (2x–5x) to learn mechanics safely.
- Use isolated margin to contain risks.
- Practice with a demo account before going live.
- Always set stop-loss equivalents via take-profit and reduce-only orders.
- Monitor funding rates — avoid holding costly longs during extreme bullishness.
Once comfortable with Binance, you’ll find similar interfaces on platforms like OKX and Bybit — but Binance remains the top choice thanks to deep liquidity and robust tools.
👉 Master advanced trading tools with real-time market insights.
By mastering perpetual contracts step by step, you gain access to powerful strategies used by professional traders worldwide. Whether hedging spot holdings or speculating on trends, understanding these mechanics puts you ahead of the curve in 2025’s dynamic crypto landscape.