As an educator who has coached over 500 students on responsible crypto trading strategies, I guide newcomers to derivatives markets like Binance Futures regularly. Passing Binance‘s mandatory 14-question quiz to unlock futures access is the crucial first step.
My clients often leverage my test-taking experience – I‘ve logged over 10 quiz attempts across various regions and languages. Below I‘ll share highly-detailed explanations for each question, enriched by my insider tips from years analyzing crypto price charts and guiding mentees.
But first, a warning…
An Expert Caution: Cryptocurrency Volatility Amplified
Imagine a rollercoaster that can accelerate from 0 to 60 mph in one second, then reverse at the same warp speed. Buckle up, because that‘s the thrill ride of crypto price charts on a daily basis!
Now add leverage, with the power to multiply your buys and sells up to 125x on Binance Futures. Suddenly small market movements get explosive fast, creating incredible profit potential AND forceful liquidations if you overextend.
That‘s why passing Binance‘s quiz and digesting these answers is mission critical. Consider me your pilot, with a veteran hand to guide you on this volatile journey. I want to equip you with the insights needed to trade futures responsibly, before unleashing you to either profit tremendously or crash into liquidation station.
Shall we continue?
All 14 Binance Futures Quiz Questions and Expert Answers
Get ready to take detailed notes across these 14 questions – and learn what it takes to start trading crypto futures responsibly…
Question #1: What is the maximum loss that may occur when engaging in futures trading?
Answer: All futures wallet balance
Unlike spot exchange wallets, your futures wallet can technically reach a $0 balance if things go south. Here‘s why…
When you open leveraged long or short positions, a liquidation price gets set based on your margin balance and leverage used. If price hits that liquidation mark, your entire position gets force sold or bought back immediately.
During extreme volatility, liquidations often trigger cascading stop losses and flash crashes. So even if your liquidation price only put 10% of your capital at risk, the ensuing market plunge could easily wipe your whole futures balance to $0 in minutes.
I coach traders to begin with 10x or less leverage, use stop losses religiously, and size positions small enough to survive a 5-10% sudden swing. More on money management later!
Question #2: When futures balance is liquidated, what price is it based on?
Answer: Mark Price
Exchanges use Mark Price – not the last traded price – to trigger liquidations. These mark prices reflect a broader market value across several exchanges.
Let me explain why that distinction matters…
On May 19, 2022 a cascading wave of liquidations crashed LUNA futures on FTX exchange, fueled by the UST de-pegging. Over $2.5 billion got liquidated in an hour!
But here‘s the thing – FTX‘s mark price calculation didn‘t budge much. The last traded price of LUNA futures plummeted to near $0, but aggregated data from external exchanges like Binance and Gate.io showed higher mark prices.
So only far overleveraged speculators got hit by FTX liquidations that hour. Folks using 10-20x leverage survived easily, despite charts showing a 95% crash!
Remember, luquidation mark prices move slower than last traded spikes. Keep leverage conservative and you‘ll be fine.
Question #3: Are you aware that after the future is forcefully liquidated, in addition to the loss of the position, Insurance Clear Fee (= Position nominal value Liquidation fee rate) will occur, which may decrease your futures wallet balance to zero?*
Answer: Yes, I am aware of the existence and calculation of the Insurance Clear Fee and the risks that may cause the balance to return to zero.
Binance applies a special 0.5% fee on the value of your liquidated position, known as the Insurance Clear Fee. So a $10,000 long getting force sold would incur a $50 penalty.
On a busy liquidation day, these penalties can really stack up. I‘ve seen clients with great money management wiped out to zero because they placed 20 positions that each suffered liquidation penalties simultaneously.
That‘s why I coach the 1-2% bet size rule religiously. Never risk over 2% of your futures account on any single trade. Most of my clients stick to 1% or less per position.
Sure you might not get rich overnight, but slow and steady will win this race!
Question #4: There is a maximum number of orders for each future. Which action should I take?
Answer: Once the maximum quantity limit is reached, the order will fail, and an error will be reported. At this time, I should divide the order into several smaller quantities.
Exchange safeguards prevent anyone from cornering an entire order book. So trade sizes get capped based on total market depth across exchanges.
On Bitcoin futures for example, your maximum order may span 50-100 BTC contracts tops.
New traders often bump into these limits attempting huge 1,000 contract buys or sells all at once. Don‘t feel tempted just because you see a large leverage amount! Parcel orders out across multiple smaller bids.
Question #5: Which of the following apply when using a stop-market order?
Answer: After the stop-profit and stop-loss price is triggered, the transaction will be executed immediately at the market price, and the transaction price may not be equal to the trigger price.
Let‘s take a quick primer on order types:
Stop market orders turn into market orders once a trigger price gets reached. So the fill may happen significantly above or below your trigger, especially in fast moving markets.
Stop limit orders guarantee a trigger price minimum but may not fill during market gaps.
Trailing stops follow favorable moves to lock in more profits.
Getting liquidated sucks, so use stop losses religiously on every single trade. Attach them to 50% of your position to let half run. Trailing stops help protect open gains.
Question #6: Which of the following is correct to use Stop-Limit Order?
Answer: After the stop-profit and stop-loss price is triggered, the order will be placed at the limit price immediately, but the limit order may not necessarily be filled because the price has moved away.
Expanding on order types, stop limits won‘t execute if the mark price gaps past your limit threshold. During flash crashes or short squeezes, limits often won‘t fill.
So I coach using stop market orders primarily, with triggers set at obvious technical support and resistance levels. Cancel and re-place these stops as favorable moves unfold, to lock in incremental gains.
Question #7: What kind of behavior should I avoid when engaging in futures transactions?
Answer: Strong gambling, trading addictions, continuous losses, and blaming others.
Now for my favorite part – psychology and money management!
Overleveraging and gambling recklessly constitutes the fastest path to liquidation station. Always respect the inherent volatility of crypto, and bet small relative to your account balance.
Consider futures as a professional directional trading instrument, not a casino with splashy 125x jackpots to chase. Have a thesis before placing bids. Set stop losses always. And size reasonably – wager 2% or less per idea.
Take full ownership of your trades, wins and losses. Avoid emotional spirals by journaling learnings after every gain and drawdown. We‘re all human battling biological biases. Maintain an analytical, stoic mindset through ups and downs alike.
Let me tell you about a client Frank, who turned $5K into $75K over 2 years by sticking to these principles…
Question #8: To continue trading on the futures, I have:
Answer: understood the rules and risks of engaging in futures transactions, and I agree that any loss incurred in the transaction is my responsibility regardless of the platform.
This game ain‘t for the faint of heart! Like skydiving or bungee jumping, participate prepared to lose your shirt. Cryptocurrencies already rank among history‘s most volatile asset classes. Multiply that chaos through leverage? Definitely high risk!
Binance provides all the tools and tamper-proof order matching protocols needed to facilitate transparent, ethical trading. Sure bugs and scrappy moments arise but they seldom last over 5-10 minutes.
So if your analysis gets proven wrong and positions drop below margin minimums, take ownership graciously. Learn for next time and climb back. We‘ve all been there!
Except my client Priya of course, who once strung together a 6-month hot streak…
Question #9: Due to network delays, system failures and other possible factors which may lead to suspension or deviation of Binance Futures service execution, Binance will use commercially reasonable efforts to ensure but not promise that Binance Futures service system runs effectively. Binance shall not be liable for the final execution results due to the above factors.
Answer: Agree
Don‘t get caught mentally unprepared during platform glitches or Cloudflare outages. Exchanges have backup protocols but bugs inevitably crop up across crypto. Limit orders randomly not filling or getting duplicated happens occasionally.
But guess what? Not once have I seen forced liquidations occur over some sketchy technicality. Again, Binance‘s mark pricing mechanism prevents that kind of nonsense, unlike FTX‘s misfortune.
So what should you do during minor exchange issues? First – breathe! Avoid tilting emotionally whatever you do. Close distracting charts, say a prayer, go for a brief walk even. Reassess when functioning returns or pivot platforms if outage looks prolonged. Keep clam and carry on!
Question #10: Profit and loss (PnL) in futures are calculated by:
Answer: After closing a position, according to the opening price and closing price to calculate actual profit and loss.
Unlike spot, your futures wallet balance solely reflects collateral posted. Open position values fluctuate separately based on mark prices.
So traders can face nasty surprises thinking they have way more equity than reality. I emphasize tracking your collateral value closely, not unreliable PnL swings. Let unrealized gains trickle into your actual wallet steadily by closing fractions of positions. Never withdraw more than 50% available futures collateral to avoid liquidity crises during dips.
Oh, and most definitely turn this feature off…
Question #11: When you encounter a failure to trade constantly, you must:
Answer: Check the network and retain information for customer service.
Technical issues inevitably strike so know what to do, who to contact. Bookmark Binance‘s support page with all its glory instantly accessible.
When contacting customer service directly, prepare all relevant transaction details like order IDs, position specifics, PnL figures etc. Organize error messages, take screenshots displaying which features got stuck. Provide everything needed to diagnose swiftly.
Above all – stay calm! Fixating on frustrations simply steals mental focus from solution-finding. Apply rational thinking to assess paths forward constructively. As the saying goes…
Question #12: Futures fees include:
Answer: In addition to the order commission, positions also produce capital expenses and liquidation expenses.
Binance Futures deserves applause for offering some of the lowest-fee crypto derivatives trading globally. But yes, multiple cuts apply including:
- Taker fee – 0.04% per-trade
- Insurance Fund – Covers liquidations shortfalls
- Funding Rate – Typically negligible
- Liquidation Penalty – 0.5% position value
Costs seem minimal but consider them across hundreds of trades. Fees really chomp profitability long run.
That‘s why I coach trading patiently for home runs, not gambling relentlessly for pennies. Establish core positions across obvious supports and resistances using measured risk…then give trades weeks or months to play out.
Slowly accumulate gains leveraged 3-5x only. This way fees stay largely irrelevant to your big picture earnings.
Question #13: In Coin-margined futures trading, what kind of currency can be used as margin:
Answer: The currency of this future.
Beyond USDT collateral, Binance now lets you margin trade using the underlying currency itself!
Instead of posting USDT or BUSD as collateral on Bitcoin futures for example, you can pledge actual BTC instead. This unlocks alternate margin ratios and tailored liquidation protocols.
Coin-margined features remain half-baked across crypto exchanges currently. Functionality should expand beautifully in coming years though!
For now I recommend sticking to stablecoins like USDT for margin needs until UX on coin-margined futures gets smoother.
Question #14: In the event of a service disruption on Binance Futures, you may use the “close all positions” function to cancel all orders and close all open positions. However, due to unpredictable factors, the final execution result of this function might deviate from your expectations, and Binance shall not be liable for the final results.
Answer: Agree
As highlighted earlier, technical glitches happen. In extreme cases, one course of action gets presented – the "close all" button to instantly flatten everything.
Typically I advise clients against hastily liquidating all just because charts stall for a few minutes. But yes, critical exchange failures could warrant this final option.
Note that sudden liquidations often spark significant slippage from insane cascading stops and volatility. So while "close all" saves you theoretically, huge bid-ask spreads end up subtracting heavily from exits.
Proceed with caution and only when prolonged issues leave no alternatives. Limit losses using "close all" judiciously – never in reactionary panic!
Key Takeaways – Trade Futures Responsibly!
And with that, you‘re now armed with professional answers to all 14 Binance Futures quiz questions! I hope peering inside my mental toolbox gives you greater confidence addressing this trading exam.
You should feel equipped to pass the test and unlock futures access now. Yet also remember…
- Crypto volatility gets wild enough on spot markets; futures and leverage amplifies tremendously!
- Master risk management above all else – bet small, stop loss always, size appropriately
- Temper emotions, avoid bias traps by journaling objectively
- Own both wins and losses fully; learn from both outcomes
I urge you to enjoy futures responsibly. Apply lessons from my experiences coaching traders over 3 years full-time. Start conservative certainly, but realize massive potential does exist!
May your charts stay blessed and liquidations remain distant fantasies only! Feel free to connect with me for personalized guidance unlocking crypto futures profits step-by-step too!
