Definitions
Binance Futures and automated trading glossary
Short definitions for the terms you meet in the dashboard and on the exchange screens: contracts, leverage, order types, fees and automation concepts.
Contracts and market
- Perpetual contract
- Futures contract with no expiry, anchored to spot price through the funding rate.
- USD-M futures
- Contracts margined in stablecoin, such as USDT futures, where margin and results are denominated in USDT.
- COIN-M futures
- Contracts margined in the crypto asset itself, settled in that asset.
- Derivatives
- Instruments whose price derives from another asset; in crypto this includes futures, perpetuals and options.
- Long
- Position that profits when the contract price rises.
- Short
- Position that profits when the contract price falls.
- Open interest
- Total open contracts in a pair, showing how much capital is positioned in that market.
- Long short ratio
- Ratio between long and short positions, used as market context.
Leverage and risk
- Leverage
- Multiplier that expands exposure relative to posted margin — and moves the liquidation price closer.
- Isolated margin
- Mode where only the margin allocated to a position absorbs its losses.
- Cross margin
- Mode where the whole futures wallet backs open positions.
- Maintenance margin
- Minimum equity required to keep a position open; below it liquidation starts.
- Liquidation price
- Price at which the exchange force-closes a position for lack of margin.
- Mark price
- Reference price used to compute unrealised PNL and trigger liquidation.
- Drawdown
- Peak-to-trough fall in equity; measures how deep the discomfort gets.
- Position size
- Contract quantity derived from acceptable risk rather than from available balance.
- Hedge mode
- Setting that allows simultaneous long and short positions on the same pair.
Orders
- Market order
- Fills immediately at the best available price and is exposed to slippage.
- Limit order
- Fills only at the chosen price or better, with no guarantee of execution.
- Stop loss
- Protective order that closes the position when price hits the accepted loss level.
- Take profit
- Order that realises profit once the target is reached.
- Trailing stop
- Stop that follows price at a fixed distance, protecting accumulated profit.
- Reduce only
- Instruction that can only shrink an existing position, never open a new one.
- Post only
- Instruction that accepts maker execution only, securing the lower fee.
- Slippage
- Difference between the expected price and the price actually filled.
Fees and metrics
- Maker fee
- Charged when you add liquidity to the order book; usually the lower tier.
- Taker fee
- Charged when you consume liquidity by filling existing orders.
- Funding rate
- Payment exchanged periodically between longs and shorts in perpetual contracts.
- PNL
- Realised or unrealised result of a position, already accounting for fees paid.
- Breakeven price
- Price at which the position breaks even after fees and funding.
- ROI
- Return relative to the margin committed to the position.
Automation
- Trading bot
- System that submits orders to the exchange following predefined parameters.
- API key
- Credential that lets an external system operate the account with limited permissions.
- IP whitelist
- List of addresses allowed to use a given API key.
- Rate limit
- Cap on requests per interval imposed by the exchange on each account.
- Backtest
- Simulation of a rule over historical data to estimate behaviour.
- Testnet
- Test environment with fictitious balance used to validate orders and integrations.
- Asymmetric hedge
- Structure where the favourable leg takes profit early and the opposite leg receives scaled reinforcements up to a cap.
- Balance supervisor
- Layer that watches aggregate account balance and blocks new entries once the limit is reached.
Frequently asked questions about these terms
What is the difference between isolated and cross margin?
With isolated margin the maximum loss is the margin allocated to that position. With cross margin the whole futures wallet backs positions, reducing isolated liquidations but exposing the full account.
What does liquidation mean in futures?
It is the forced closing of a position by the exchange when equity falls below maintenance margin, calculated from the mark price.
How does the funding rate work?
In perpetual contracts, longs and shorts exchange payments at periodic windows to keep the contract near spot price. Whichever side is crowded pays.
What is drawdown and why does it matter?
It is the peak-to-trough fall in equity. It shows the worst stretch of the curve and helps size how much fluctuation you can tolerate.
Start with US$20 and your own rules
Terms clear? Set your cap, connect the account and let the bot execute.