---
title: 'Binance Demo Trading Tutorial for Beginners (Paper Trading)'
source: 'https://youtube.com/watch?v=wr7zut2-iNk'
video_id: 'wr7zut2-iNk'
date: 2026-08-05
duration_sec: 1001
---

# Binance Demo Trading Tutorial for Beginners (Paper Trading)

> Source: [Binance Demo Trading Tutorial for Beginners (Paper Trading)](https://youtube.com/watch?v=wr7zut2-iNk)

## Summary

This tutorial walks beginners through Binance's demo trading feature, explaining how to practice trading with paper money. It covers the basics of spot trading, including market and limit orders, and introduces futures trading with leverage, take profit, and stop loss orders.

### Key Points

- **Accessing Binance Demo Trading** [00:01] — To practice trading without real money, users can use Binance's demo trading feature. If you don't have an account, you can sign up for free, and there may be a bonus. The demo trading interface mirrors the real trading screens and provides paper money.
- **Spot vs. Futures Markets** [00:55] — Binance demo trading offers two markets: spot and futures. Spot trading involves buying and selling assets directly with cash, while futures are derivative contracts that mimic the price of the underlying asset without actually owning it.
- **Spot Trading Basics** [01:07] — In spot trading, you use money to buy assets like Bitcoin or gold. You can sell them back for money or trade one asset for another. The trading pair (e.g., BTC/USDT) determines what you're buying and selling. USDT is a stablecoin pegged to the US dollar.
- **Order Book and Market Tracking** [02:43] — The demo market tracks the real market price closely. The order book shows buy and sell orders from other traders. Trades occur when a buyer and seller agree on a price.
- **Market Orders** [03:37] — A market order executes immediately at the current market price. For example, buying $100 worth of Bitcoin will fill at the best available ask price. The trade appears in trade history.
- **Limit Orders** [05:10] — A limit order lets you set a specific price. If the price is away from the market, the order remains open in the order book until it fills or you cancel it. You can edit the price or amount before it fills.
- **Futures Trading Overview** [07:43] — Futures are derivative products. You don't own the asset; you take a position (long or short) based on price movement. You can short sell without owning the asset, which isn't possible in spot trading.
- **Leverage and Margin** [10:11] — Leverage allows you to control a larger trade size with less cash. For example, 2x leverage on a $1,000 trade requires $500 cash. Higher leverage increases the risk of liquidation if the price moves against you.
- **Take Profit and Stop Loss** [15:18] — In futures, you can attach take profit and stop loss orders to automatically close your position at a profit or loss, helping manage risk without manual intervention.

### Conclusion

Binance demo trading is a valuable tool for beginners to learn trading mechanics without financial risk. Understanding spot vs. futures, order types, and leverage is essential before trading with real money.

## Transcript

you can practice your trading with paper money. So, once you have a Binance then demo trading. If you don't have a Binance account, you can sign up for one trading for free as well. I'll leave a link below. I think they give a bonus
to know how to sign up to Binance and everything else, I'll leave a full description as well. But, we're going to hit demo trading here. And it's going to take us over to uh what is exactly the same. It's like a
copy of the real uh trading screens. And it's going to give you some paper money So, what we're going to do is agree to the terms and start demo trading here. And then we can go ahead and trade just like we would on the actual real Binance
site. Uh but, the money that we get given is of course just paper. You can see assets down here just above my head. They give us an amount to trade with. So, we can go ahead, buy, sell, and do everything else on Binance demo trading.
Binance demo trading lets us trade in two different markets. One is the spot market here, top left, and then one is futures. And I'll explain the difference between them. Firstly, we'll cover spot trading. Spot trading is where you have
some money and you use that money to buy assets. And then if you want to sell into the money that you have and that's it. So, this is where most people trade, right? This is the cash settled market. If you want to buy some gold or some
Bitcoin or any of the other assets here, you swap your money for them and then you can sell them back to the money or you can actually trade one asset for got Bitcoin and I want to switch it into ETH or Solana or something else, you can
do that directly as well. So, let's go over the spot trading page here. Firstly, with spot trading, we have the asset pair that we're looking at. So, you can see that Binance gives us 5,000 USDT to trade with. USDT is a US
dollar stable coin, so just think of it as US dollars. Um so, we have $5,000 here. Now, Now, you want to do is go and search for trading pairs. So, let's say that I want to buy Bitcoin, I can type in BTC, which is the, you know, the
different trading pairs that Bitcoin trade trades against. Now, we've got USDT, so that's the trading pair that we would go ahead and trade. So, we've got USDT, the other side of the trading pair is Bitcoin. So, we're buying and selling
Bitcoin and USDT. If you had a different type of stable pair. For example, USDC is another one. We'd have to choose this one if we had USDC. You can also switch from one stable coin into another. So, let's type
USDC, and you can see the trading pair here. So, I've got USDT, and I'll switch which is USDC. So, you can go ahead and find any assets that you want to trade, and the exchange rate will come up here, right? So, this market is
not the real market, but it's tracking the market itself. So, the real price of Bitcoin USDT is going to be almost exactly the same as what we see here. um, you know, just a made-up market. It's not real people buying here, but we
can go ahead and trade. So, what we have here is we have sellers on top and And everyone, what they're doing is they're showing their orders to everyone else, and they're saying, "Hey, I'm a buyer of Bitcoin at this price."
The highest bid is this one right here, and then it comes down a little bit, as saying, "I'm willing to sell Bitcoin at this price." And people higher up are here. This is the order book, so sellers and buyers. And whenever a seller and a
so they actually have the same price for their buy and sell order, that's when two people actually go ahead and trade. And so, we can enter this order in into you buying and selling and how to input orders, and this is exactly the same in
the demo trading and the live, uh, market as well. But, we have a buy and does that mean, though? What are we buying and selling? Well, we have a trading pair here of Bitcoin USDT. Bitcoin is the base asset, so think of
that as the asset that you're going to be doing things with, right? So, if Bitcoin. If we're selling, that means we're selling Bitcoin. The other side of the pair we have is dollars. So, we'll we're going to buy Bitcoin with dollars,
or if we sell, we sell Bitcoin to dollars. So, let's go with a market A market order is where you don't choose the price that you pay, but you choose dollars, so we're going to spend some dollars. Let's put $100 in here. And you
can see that we've got $5,000. We're going to buy $100 worth of Bitcoin. Now, we're going to get because the price is changing a little bit, but we know that we're going to spend $100. And what we're going to do is we're going to take
saying, "Hey, you want my Bitcoin? You can buy it at this price." So, we just come in and buy from the cheapest guy on the order book right here. So, let's go price that we trade at. So, we're going to trade immediately at this price,
button. Press buy BTC. That's it. You can see below my head that order was filled. And that's it. Order history is right here. That is the trade that we history. This is certainly uh what we traded,
So, trade history is what you actually did. You can see all the amounts and everything like that. Order history is when you put an order in. If it trades your trade history. Now, you can also put orders in that don't trade
immediately because your price is away from the market price. And so, that will didn't trade it, it won't be in your trade history. The way that you can put is by using limit orders. So, what we'll do is go back up to the top. We're going
choose a limit order. A limit order is where you choose the For the most part, if you do this, um you're going to be away from the mid price, right? If I'm a buyer, and I want
to trade immediately, I'll just use a market order and trade here. But, if I'm using a limit order, it's because I want to trade at a a price on because I'm a buyer. I'm not willing to trade at this price right now, immediately. I want to
trade a little bit lower if I can. And so, using a limit order on the buy side, you're going to be below the mid price. So, let's choose a 77,000 uh 250. That's my limit. I'm willing to buy at that price. And let's choose an
amount here. We can do it in USD again, so $100. Now, it's going to work out $100 at this price buys this fraction of a Bitcoin. We trade the price in one unit, right? So, per one unit of Bitcoin, this is the price.
But, we can trade any fraction of a Bitcoin. It's going to work out to $100. market, "Hey, I'm willing to buy Bitcoin, but I'm only willing to trade at 77,250 per unit." Now, because my price is cheaper than
other people, right? These people are willing to pay more than me. No one's However, what will happen is my order will go on to the order book right here. And it will wait to trade. So, let's go ahead and press buy BTC here.
You'll see that I've got an open order now. It's in my order history. Um and so, what this means is that Binance has my order. trade with me at this price, we'll go ahead and trade. As of right now, there
right? You have other people that are than me. So, my order is in the system and it is it's open and waiting to And so, it's just going to sit there forever until I do something with it. On
the right-hand side, you can press the bin icon to cancel the order completely. Um or you can edit the price and the amount. So, let's go to edit here. Let's put it up to 77,350. And that will have much a much higher
right? So, press confirm here. And that just edits the price I'm amount will obviously change as well because we wanted to spend $100, right? And if you want to cancel the order on
that. Now, there are no trading fees exchanged unless you actually exchange doesn't cost anything. Obviously, we're demo trading, so we don't exchange any real money anyway. Now, I'll show you futures trading in Binance demo trading
as well. Futures is a completely different product. When we trade spot, and buying and selling assets and back and forth. With futures, futures are a and forth. With futures, futures are a derivative product of the spot market.
trading the assets at all. What you're doing is trading a contract that mimics the price of the underlying spot pair. So, again, we're going to trade Bitcoin USD. So, you're not trading the asset, and
you're not exchanging any money for the asset at all. All that you're doing is taking a position. You're taking a trade long, which is like buying, or short, So, you're basically saying, when you get into your trade at this current
price, do you think the price is going up or down? And it's as simple as that. If you go long, then you are going to essentially buy and then sell higher to make your profit. If you press short, what you're
doing is essentially selling and then buying back lower to make your profit. So, you sell high and buy low, but you're selling first. The reason you use futures for this is because in futures, you can actually take a short position
or sell without having the asset at all. Uh you can't do that in spot, right? In spot, you need the asset in order to sell it. With futures, because you're just trading the price of the asset and not the asset at all.
So, long is where you benefit from the price going up. Short is when you You're taking a trade on the price only. The way that you can do this is you need to be able to settle the trade after you open it. So, you open a
trade and then you close the trade. If you make a profit, great. If you don't, then you have to pay for the loss, right? You made a loss in that trade, so The way that you pay for it is through cash.
Right? So, you put an amount of cash on the system, and you can see just above my head, we've got again $5,000 here in in demo trading. So, they've given us $5,000. And that is the cash that we use to pay
of course, you need to tie up some of that money in the trade so that uh Binance uh knows that you can pay for any potential losses. So, it's not like we've got $5,000 that we trade. We can basically trade any size that we want.
as the we can pay for the potential loss. In futures, the cash that we have in our account is simply there to pay for losses. And because of this, we can use leverage in our trades. Leverage is where you open a certain trade size, and
then you fund it with less money. The reason being is that we're only worried about paying for potential losses in that trade, and that's it. So, up in the top here with futures, you can see the uh X icon here. This is your leverage.
So, I'm going to choose 2X leverage. What we're going to do here on the right-hand side is go to USDT as well, so we can just figure out how big our trade size is. So, let's say that I want to open a $1,000 trade size.
We're using 2X leverage, and leverage is the trade size in relation to how much cash you have to fund that position. 2X leverage of a $1,000 trade means that I have to put down half in cash. You can see the cost to me is $500.
see the cost to me is $500. 500 is my cash * 2 is my trade size. If I were to get a $10,000 trade, then the cost to me is $5,000. Again, it's 2X leverage, so $5,000 cash, 2X leverage, * 2 is $10,000.
What we have to um focus on here is that the cash is there to pay for potential losses. So, because my trade size is bigger than position, it means that the percentage movements are bigger in relation to my
cash. So, on a $1,000 trade, because I only have $500 cash to fund that position, I can fund a 50% downwards move, right? If I lose 50% of this $1,000, that's $500. So, my cash
gets wiped out, meaning that I get liquidated because the system, the don't have any more cash to fund your loss. We're going to trade out of the market right now. You fund the loss, you get out of the trade. They're not going
to have a bad debt on their hands." So, leverage is trade size in relation to And what you have to figure out here is how much can you lose before you get liquidated? Well, in this case, it is uh 50% 50% move.
If you go to 10x leverage, it's exactly the same calculation now, but of course, we have much more leverage. So, our trade size can be exactly the same, but because we're using more leverage,
it means we only tie up $100. 100 * 10 is 1,000. Same trade size, less cash down, more leverage. What this means is that we can now only sustain a 10% drawdown in this trade
before our $100 cash is wiped out, and Binance would liquidate the position. So, leverage is really how much volatility can you handle. Um so, what we're going to do is go back to 2x leverage,
confirm. We can go long here, so buy long with 2x leverage to $1,000. air for you, just in case you need it. So, start quiz here.
take when you place an order? Uh there is a maximum size limit for each order. receive this type of error message? Keep trying. several orders. Which of the following descriptions of
stock market orders is correct? The executed price is always equal to the trigger price. The order will be executed at market price. That one. The one right here. Which of the following description of
stop limit order is correct? The order will be placed at the limit price once the price hits the trigger. The limit will definitely It's this one Which of the following description of profit and loss is correct?
I won't lose money. That's not true. Realized P&L after positions are closed is always equal to the unrealized P&L. Realized P&L is calculated based on the one right here. What is the maximum loss that may occur
in futures trading? All of the money in my futures wallet. Which coin can be used for margin in coin margin futures? That is the base. what price is it based on? Probably the mark price.
Futures fee includes commissions, liquidation clear fees. Are you aware that after futures position is liquidated, in addition to the loss of the position, a fee will occur which may decrease your
aware. What kind of behavior should I avoid gambling, obviously. To continue trading on futures, I have understood the rules. Due to network delay, system failures that may lead to some service
that may lead to some service degradation. Yes, agree. Okay, submit. And then we can go ahead and trade. So, we'll do the exact same thing. We'll buy And there you go. We have the order open. So, what we have here is a $1,000
trade size. Here's our entry price. Here is our running P&L. So, that's how much we're making or losing in the position. And of course, we can go ahead and close this if we want on the right-hand side here.
add a take profit and stop loss order as well. Let's go ahead and open a take profit and stop loss. A take profit is literally getting out of your trade at a profit. Now, because we're long, we're going to go higher
like this. And a stop loss would be to get out of your trade at a loss. Rather liquidated, losing all all of our money, or doing it manually, you can say at at some certain price just get me out of
So, let's say 75 75 like this. confirm. What would happen is that these orders would be tied to the long trade
that you have here. And essentially, that these orders would get your order basically close the position. This would be at a profit and this would be at a loss. You can confirm that if you want. If you want to close out your positions
in futures, come down to this right here. You can close via a market order is do you want to get out at some specific price? You can do that if you want. Or if you want to just get out of your trade, press market order here.
So, you closed that trade and whatever the running PNL was after fees and returned to your account. If you need a full video guide for Binance and trading else, look at the videos listed in the description. I'll leave the link to sign
account as well. I think they often give bonuses for new users. I'm James as Money Z Geeks for watching and I'll see you in the next one.