What are perpetual futures?
Contracts that follow a coin's price without an expiry date: long and short positions, leverage, margin and liquidation.
A futures contract is an agreement to buy or sell an asset at a later time at a price fixed today. A perpetual futures contract (a "perpetual" or "perp") has no expiry date: it follows the price of the underlying asset and can be held indefinitely.
Long and short
- A long position gains when the price rises.
- A short position gains when the price falls.
Because you trade a contract, you do not own the coin itself.
USDT-margined contracts
On USDT-M perpetuals such as BTCUSDT, profit, loss and collateral are counted in USDT.
Leverage and margin
Leverage lets a trader open a position larger than their own funds. With 10× leverage, 100 USDT of margin controls a 1,000 USDT position. Profits and losses are counted on the full position, so a 1% price move changes the margin by about 10%.
Liquidation
If losses use up most of the margin, the exchange closes the position automatically. This is liquidation, and the margin is lost. The higher the leverage, the smaller the price move needed for liquidation.
Funding
To keep the perpetual price close to the spot price, longs and shorts pay each other a periodic funding rate. Read Funding rate, mark price and index price.
University materials are for education only and are not investment, legal or tax advice.