Perpetual Futures – A Practical Guide
When working with Perpetual Futures, a type of crypto derivative that never expires and settles via regular funding payments. Also known as never‑ending futures, it lets traders keep positions open indefinitely, mirroring spot market movements while adding leverage. This structure makes it a core tool for anyone looking to capture short‑term price swings without rolling contracts.
One of the key mechanics behind Funding Rate, the periodic payment exchanged between long and short positions to keep contract price aligned with the underlying asset is the funding rate itself. When the rate is positive, longs pay shorts; when negative, the reverse happens. Understanding how this rate is calculated—usually based on the price premium or discount to spot—helps you predict cost of holding a position. A high funding rate can erode profits quickly, while a low or negative rate can actually boost returns, especially in a trending market.
To take advantage of these dynamics you need Margin Trading, the practice of borrowing funds to increase exposure beyond your own capital. Proper margin selection determines both the potential upside and the risk of being liquidated. Traders often use a mix of isolated and cross margin to balance flexibility with safety. Setting a realistic maintenance margin and using stop‑loss orders are essential habits; they let you stay in a trade longer without fearing a sudden wipe‑out.
Speaking of wipes, Liquidation, the forced closing of a leveraged position when its equity falls below the required maintenance margin is the ultimate risk manager built into every perpetual futures platform. Liquidation thresholds vary by exchange, but the principle remains the same: the system protects lenders by closing losing positions automatically. Knowing the exact liquidation price for your trade lets you set tighter risk controls and avoid surprise losses.
Perpetual futures also intersect with broader crypto derivatives markets, including options and traditional futures. The interplay between funding rates, margin requirements, and liquidation engines creates a feedback loop that can amplify market moves. Savvy traders watch these signals together, using them to time entries, size positions, and manage exposure across multiple contracts.
Below you’ll find a curated collection of articles that break down each of these concepts in detail, from funding‑rate calculators to margin‑management checklists and liquidation‑risk case studies. Dive in to sharpen your strategy and stay ahead in the fast‑moving world of perpetual futures.
