Hey r/binance!
I made myself a risk management calculator for trading on the Perpetual Futures, and decided I may as well publish it for all to use.
//profitd.io/risk-calculator
You can use it to determine the ideal position size & leverage based on what % of your account you want to risk and your trade plan. That is to say, if you have a 2% stop loss and want that to equal 3% account capital - this will work it out for you.
I have ideas for improving it, but would love to hear any feedback :)
Forex pairs are 100,000 units per 1 lot
Units per 1 lot vary on non-forex pairs, please check with your broker
In MT4 and MT5 right click a symbol and then click Specification. The Contract Size field tells how many units are in one lot.
View image
Check out the live price action of this pair with our Live Price Charts.
Use our Position Size and Risk Calculator to easily calculate the recommended lot size, using live market quotes, account equity, risk percentage and stop loss.
TIP: Looking for trading ideas? Check out our trading forum with EUR USD forecasts, free MT4 and MT5 indicators. Get involved, learn and share trading strategies, participate on our contests, win amazing prizes, and more!What are Lots
In forex a Lot defines the trade size, or the number of currency units to be bought or sold in a trade. One Standard Lot is 100,000 units of the base currency.
Most brokers allow trading with fractional lot sizes down to .01 or even less. Fractional lot sizes are sometimes referred to as mini lots, micro lots and nano lots. Please refer to the image above to compare the sizes and units.
How to Use the Position Size and Risk Calculator
Currency pair: Traders can select from Major Forex crosses, Minor pairs and also the most popular cryptocurrencies versus the USD (BTC/USD, ETH/USD, LTCUSD, XLM/USD and XRP/USD) or Gold/Silver versus the USD. Let's choose, for example, the USD/CAD.
Deposit currency:
The account base currency is important to assess the ideal lot size, as it takes into consideration the pip value and the market rate of the selected cross. We choose USD as our deposit currency, for this example.
Stop loss (pips): Traders should input the maximum number of pips they are willing to risk, or lose, in a trade, to protect the account equity in case the market goes against their position. For this example we will use 100 pips as our stop loss.Account balance: Pretty straight forward, traders just need to input their account equity. On our example we will type 2000.
Risk:
The crucial field of this Position Size and Risk Calculator! In this field traders can select from a risk percentage or any amount of their account base currency ($2, $20, $40, etc). As a guideline, professional traders do not risk more than 2% of their account equity per trade. This technique will allow for traders to last longer with their trading careers, and eventually, also to recoup from previously losing trades. For our example we will select 2% risk.Now, we hit the "Calculate" button.
The results: The Position Size and Risk Calculator uses a market price live feed with the current interbank rate (in a 5-digit format) and it will display the selected currency pair price (in our example the USD/CAD price).
In this case, using a stop loss of 100 pips and risking 2% of our account equity, the recommended lot size would be 0.05 lot.
Next, the calculator displays the amount of units that 0.05 lot represent; 5,000 units and finally the portion of the account equity at risk, or the value of the position, in this case 40 USD.
You might also find our Drawdown Calculator useful. It can help you to accurately calculate how your trading account equity can be affected after a series of losing trades.
Embed this Position Size and Risk Calculator on Your Website
Our tools and calculators are developed and built to help the trading community to better understand the particulars that can affect their account balance and to help them on their overall trading.Regardless if investors trade the Forex market, cryptocurrencies or any other financial instruments, our complete suite of accurate Forex tools and calculators are programmed to work with any data inputted.
By using live market data, our set of calculators allows traders to always get the most accurate results possible, and they work with most FX pairs, metals and even cryptocurrencies. Also, these great calculators are translated into 23 different languages including Arabic, Russian, Japanese and Chinese.
With an intuitive design and a user-friendly interface, these calculators can be easily integrated with any web page. The substantial advantage is that they are completely unbranded, and can be fully customizable to any color scheme and to fit the layout of any web page.If you're a webmaster and consider that these calculators can create added value for your website on a "Tools/Calculators" section, you are free to embed them on your website.The embedding widget can be used as it is or it can be fully configured to match your website’s colours. When you are happy with the settings, simply copy/paste the final code to embed the tool/calculator widget on your page.
As a futures trader, it is critical to understand exactly what your potential risk and reward will be in monetary terms on any given trade. Use our Futures Calculator to quickly establish your potential profit or loss on a futures trade. This easy-to-use tool can be used to help you figure out what you could potentially make or lose on a trade or determine where to place a protective stop-loss order/limit order to capture your profit. Read tips for how to use the futures calculator below.
| Ticks | |
| Points | |
| USD($) |
| Jan=F, Feb=G, Mar=H, Apr=J, May=K, Jun=M, Jul=N, Aug=Q, Sep=U, Oct=V, Nov=X, Dec=Z |
| / |
| / |
| Margin |
| Hours |
- Select the desired futures market by clicking the drop-down menu.
- Choose the appropriate market type, either Bullish (Going Long) or Bearish (Going Short).
- Enter your entry and exit prices. (Each market price format is unique, so please refer to the “Price Format Example” provided in the information section to ensure the correct calculation)
- Enter the number of futures contracts.
- Click the “Calculate” button to determine your specific profit or loss in ticks/points and USD$.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A "LIMIT MOVE", IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
By Cryptocurrency
Register Binance AccountOpen demo account
Before opening a Binance Futures account, you need a regular Binance account. If you don’t have one, you can go to Binance and click on Register in the top right corner of your screen. Then follow these steps:
- Enter your email address and create a safe password. If you have a referral ID, paste it in the referral ID box. If you don’t have one, you can use our referral link to get a 10% discount on spot/margin trading fees.
- When you are ready, click on Create account.
- You will receive a verification email shortly. Follow the instructions in the email to complete your registration.
How to fund your Binance Futures account
You can transfer funds back and forth between your Exchange Wallet (the wallet that you use on Binance) and your Futures Wallet (the wallet that you use on Binance Futures).
If you don’t have any funds deposited to Binance, we recommend reading How to Deposit on Binance. To transfer funds to your Futures Wallet, click on Transfer on the right side of the Binance Futures page.
Binance Futures interface guide
2. This is where you can:
- Choose the contract by hovering over the current contract’s name (BTCUSDT by default).
- Check the Mark Price (important to keep an eye on, as liquidations happen based on the Mark Price).
- Check the expected Funding Rate and a countdown until the next funding round.
- See your current chart. You can switch between the Original or the integrated TradingView chart. You’ll get a real-time display of the current order book depth by clicking on Depth.
- See live order book data. You can adjust the accuracy of the order book in the dropdown menu on the top right corner of this area (0.01 by default).
- See a live feed of previously executed trades on the platform.
5. This is your order entry field. See our detailed explanation of the available order types further down in this article. This is also where you can switch between Cross Margin and Isolated Margin. Adjust your leverage by clicking on your current leverage amount (20x by default).
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How to adjust your leverage
Binance Futures allows you to manually adjust the leverage for each contract. To choose the contract, go to the top left of the page and hover over the current contract (BTCUSDT by default). To adjust the leverage, go to the order entry field and click on your current leverage amount (20x by default). Specify the amount of leverage by adjusting the slider, or by typing it in, and click on Confirm.
What is the difference between Mark Price and Last Price?
To avoid spikes and unnecessary liquidations during periods of high volatility, Binance Futures uses Last Price and Mark Price. The Last Price is easy to understand. It means the Last Price that the contract was traded at. In other words, the last trade in the trading history defines the Last Price. It’s used for calculating your realized PnL (Profit and Loss). The Mark Price is designed to prevent price manipulation. It’s calculated using a combination of funding data and a basket of price data from multiple spot exchanges. Your liquidation prices and unrealized PnL are calculated based on the Mark Price.
What order types are available and when to use them?
There are many order types that you can use on Binance Futures:
Limit Order
A limit order is an order that you place on the order book with a specific limit price. When you place a limit order, the trade will only be executed if the market price reaches your limit price (or better). Therefore, you may use limit orders to buy at a lower price, or to sell at a higher price than the current market price.Market Order
A market order is an order to buy or sell at the best available current price. It is executed against the limit orders that were previously placed on the order book. When placing a market order, you will pay fees as a market taker.Stop Limit Order
The easiest way to understand a stop limit order is to break it down into stop price, and limit price. The stop price is simply the price that triggers the limit order, and the limit price is the price of the limit order that is triggered. This means that once your stop price has been reached, your limit order will be immediately placed on the order book. Although the stop and limit prices can be the same, this is not a requirement. In fact, it would be safer for you to set the stop price (trigger price) a bit higher than the limit price for sell orders, or a bit lower than the limit price for buy orders. This increases the chances of your limit order getting filled after the stop price is reached.Stop Market Order
Similarly to a stop limit order, a stop market order uses a stop price as a trigger. However, when the stop price is reached, it triggers a market order instead.Take Profit Limit Order
If you understand what a stop limit order is, you will easily understand what a take profit limit order is. Similarly to a stop limit order, it involves a trigger price, the price that triggers the order, and a limit price, the price of the limit order that is then added to the order book. The key difference between a stop limit order and a take profit limit order is that a take profit limit order can only be used to reduce open positions. A take profit limit order can be a useful tool to manage risk and lock in profit at specified price levels. It can also be used in conjunction with other order types, such as stop limit orders, allowing you to have more control over your positions. Please note that these are not OCO orders. For example, if your stop limit order is hit while you also have an active take profit limit order, the take profit limit order remains active until you manually cancel it. You can set a take profit limit order under the Stop Limit option in the order entry field.Take Profit Market Order
Similarly to a take profit limit order, a take profit market order uses a stop price as a trigger. However, when the stop price is reached, it triggers a market order instead. You can set a take profit market order under the Stop Market option in the order entry field.Trailing Stop Order
A trailing stop order helps you lock in profits while limiting the potential losses on your open positions. For a long position, this means that the trailing stop will move up with the price if the price goes up. However, if the price moves down, the trailing stop stops moving. If the price moves a specific percentage (called the Callback Rate) in the other direction, a sell order is issued. The same is true for a short position, but the other way round. The trailing stop moves down with the market, but stops moving if the market starts going up. If the price moves a specific percentage in the other direction, a buy order is issued. The Activation Price is the price that triggers the trailing stop order. If you don’t specify the Activation Price, this will default to the current Last Price or Mark Price. You can set which price it should use as a trigger at the bottom of the order entry field. The Callback Rate is what determines the percentage amount the trailing stop will “trail” the price. So, if you set the Callback Rate to 1%, the trailing stop will keep following the price from a 1% distance if the trade is going in your direction. If the price moves more than 1% in the opposite direction of your trade, a buy or sell order is issued (depending on the direction of your trade).How to use the Binance Futures calculator
You can find the calculator at the top of the order entry field. It allows you to calculate values before entering either a long or a short position. You can adjust the leverage slider in each tab to use it as a basis for your calculations.The calculator has three tabs:
- PNL – Use this tab to calculate your Initial Margin, Profit and Loss (PnL), and Return on Equity (ROE) based on intended entry and exit price, and position size.
- Target Price – Use this tab to calculate what price you’ll need to exit your position at to reach the desired percentage return.
- Liquidation Price – Use this tab to calculate your estimated liquidation price based on your wallet balance, your intended entry price, and position size.
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How to use Hedge Mode
In Hedge Mode, you can hold both long and short positions at the same time for a single contract. Why would you want to do that? Well, let’s say you’re bullish on the price of Bitcoin in the longer term, so you have a long position open. At the same time, you may want to take quick short positions on lower time frames. Hedge Mode allows you to do just that – in this case, your quick short positions won’t affect your long position.The default position mode is One-Way Mode. This means that you can’t open both long and short positions at the same time for a single contract. If you tried to do it, the positions would cancel each other out. So, if you want to use Hedge Mode, you’ll need to enable it manually. Here’s how you do that.
- Go to the top right of your screen and select Preference.
- Go to the Position Mode tab and select Hedge Mode.
What is the Funding Rate and how to check it?
The Funding Rate makes sure that the price of a perpetual futures contract stays as close to the underlying asset’s (spot) price as possible. Essentially, traders are paying each other depending on their open positions. What dictates which side gets paid is determined by the difference between the perpetual futures price and the spot price. When the Funding Rate is positive, longs pay shorts. When the Funding Rate is negative, shorts pay longs. If you’d like to read more on how this process works, check What Are Perpetual Futures Contracts?. So what does this mean for you? Well, depending on your open positions and the Funding Rates, you’ll either pay or receive funding payments. On Binance Futures, these funding payments are paid every 8 hours. You can check the time and the estimated Funding Rate of the next funding period on the top of the page, next to Mark Price. If you’d like to check the previous Funding Rates for each contract, hover over Information and select Funding Rate History.What is Post-Only, Time in Force, and Reduce-Only?
TIF instructions allow you to specify the amount of time that your orders will remain active before they are executed or expired. You can select one of these options for TIF instructions:
- GTC (Good Till Cancel): The order will remain active until it is either filled or canceled.
- IOC (Immediate Or Cancel): The order will execute immediately (either fully or partially). If it is only partially executed, the unfilled portion of the order will be canceled.
- FOK (Fill Or Kill): The order must be fully filled immediately. If not, it won’t be executed at all.
When are your positions at risk of getting liquidated?
Liquidation happens when your Margin Balance falls below the required Maintenance Margin. The Margin Balance is the balance of your Binance Futures account, including your unrealized PnL (Profit and Loss). So, your profits and losses will cause the Margin Balance value to change. If you’re using Cross Margin mode, this balance will be shared across all your positions. If you’re using Isolated Margin mode, this balance can be allocated to each individual position. The Maintenance Margin is the minimum value you need to keep your positions open. It varies according to the size of your positions. Larger positions require higher Maintenance Margin. You can check your current Margin Ratio in the bottom right corner. If your Margin Ratio reaches 100%, your positions will be liquidated. When liquidation happens, all of your open orders are canceled. Ideally, you should keep track of your positions to avoid auto-liquidation, which comes with an additional fee. If your position is close to being liquidated, it may be beneficial to consider manually closing the position instead of waiting for the auto-liquidation.
What is auto-deleveraging and how can it affect you?
When a trader’s account size goes below 0, the Insurance Fund is used to cover the losses. However, in some exceptionally volatile market environments, the Insurance Fund may be unable to handle the losses, and open positions have to be reduced to cover them. This means that in times like these, your open positions can also be at risk of being reduced. The order of these position reductions is determined by a queue, where the most profitable and the highest leveraged traders are at the front of the queue. You can check your current position in the queue by hovering over ADL in the Positions tab.
Closing thoughts
Futures contracts are derivatives that give traders the obligation to buy or sell an asset in the future. But unlike traditional futures contracts, the perpetual futures contracts don’t have a settlement date.
Still, derivatives can be confusing for inexperienced traders, so it’s crucial to understand how these contracts work before taking financial risk. As mentioned, you can access the Binance Futures testnet to test out the platform without risking real funds.
Register Binance AccountOpen demo account