Leverage on Binance futures: what it is and how it affects a bot trade

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Leverage on Binance futures is the number of times a position is larger than the margin set aside for it, and in the Snapback bot it is one setting of three that together define trade size and possible loss. For the mechanics of futures themselves, read Binance futures leverage and liquidation.

What it means in plain words

A futures position is opened not with all your money but with a part of it called margin. Leverage of 3x means each unit of margin supports three units of position. A price move then affects the result three times as strongly as without leverage, both towards profit and towards loss.

Why it exists

Leverage lets you hold a position of a certain size while setting aside a smaller part of the deposit. At the same time it shortens the distance to liquidation: the higher the leverage, the smaller the price move against the position that closes it by force.

How it works in the code

Position size equals margin x leverage, where margin is the percentage of the deposit (see that article). Before each trade the bot sets this leverage for the coin on the exchange and tries to switch the coin to cross margin.

There is a safety limit: the highest leverage at which liquidation is still beyond the stop (with a 20% safety margin). The formula is int(1 / (1.2 x stop x (1 + rate) + rate)), where rate is the coin's maintenance margin rate. If the chosen leverage is above the limit, the trade does not open, because the exchange would liquidate the position before the stop could trigger.

Illustration of the mechanism only, not advice: margin 20 USDT, leverage 3, position 60 USDT. A 1% price move gives a result of 0.6 USDT, which is 3% of margin. Without leverage (1x) the same move would give 1%.

Allowed values and defaults

In the configuration, a whole number from 1 to 125, with no default. In the wizard from 1 to 20, and the field is automatically capped by the limit for the selected stop. With the fallback rate of 2.5%: a 10% stop gives a limit of 6x, 15% gives 4x, 20% gives 3x, 25% gives 3x and 30% gives 2x. The form starts at leverage 3.

What happens if it is higher or lower

  • Higher leverage: a larger position for the same margin, a result more sensitive to price moves and liquidation closer. You cannot choose above the limit for your stop.
  • Lower leverage: a smaller position for the same margin, liquidation farther away and a result less sensitive to price. The position may become too small for the exchange minimum.

Trading futures with leverage is risky and you can lose the funds you put in.

How it connects to other settings

Common mistakes

  • Thinking the leverage ceiling is the same for all coins: it depends on the coin's maintenance margin rate.
  • Raising leverage without changing the deposit percentage and not noticing that the position grew by the same factor.
  • Confusing leverage with the stop-loss: they are different things.

Where to find it in the bot wizard

The "New bot" or "Edit" form, the "Risk" block, the "Leverage" field. Under it is a hint like "With a -20% stop the maximum is 3x, otherwise liquidation comes before the stop".

Frequently asked questions

What is leverage on futures and what should I set?

Leverage shows how many times the position is larger than your margin. We do not recommend a value: the higher the leverage, the more a price move affects the result and the closer liquidation is. The leverage ceiling depends on the stop-loss.

What is the maximum leverage I can set in the bot?

The configuration allows 1 to 125, but the wizard goes no higher than 20, and lower still if the chosen stop-loss requires it. For a 20% stop the wizard shows a limit of 3x.

Why did the bot not open a trade because of leverage?

If the leverage is above the safe limit for your stop-loss on that coin, the trade is rejected, because liquidation would come before the stop.

Does leverage increase risk?

Yes. Leverage makes the position larger relative to margin, so the same price move produces a bigger result as a percentage of margin.

Read also

Stop loss percent: how far above entry the stop sitsThe stop-loss setting in the Snapback bot: 10, 15, 20, 25 or 30% price move against a short, how the stop is placed and how it caps leverage.Entry size as a percent of deposit: how much goes into one tradeThe 'Entry size, % of deposit' setting in the Snapback bot: what share of your deposit is set aside as margin per trade and how position size follows.Binance futures leverage and liquidationBinance futures leverage and liquidation in plain words: what margin is, how leverage multiplies results, when liquidation hits and how Snapback caps it.How a trading bot protects a positionHow a trading bot protects a position in Snapback: a stop on the whole position, take-profits, recovery after failures, market close and risk limits.