What are perpetual futures?
In one line: Perpetual futures (perps) are futures contracts with no expiration date, mostly used in crypto, that stay close to the spot price through regular funding payments.
How they differ from regular futures
| Regular Futures contract | Perpetual futures | |
|---|---|---|
| End date | Yes (e.g. March, June) | None |
| Rolling | Needed to stay in | Not needed |
| Kept near spot by | Expiry pulling price in | The Funding rate |
| Where | Regulated exchanges like CME | Mostly crypto exchanges |
Perps are the most traded crypto product on many exchanges. In the US, access has been limited; a few regulated venues have started offering perpetual-style contracts. Check what's legal and available where you live.
A simple example with numbers
You put up $1,000 and open a bitcoin perp at 10x Leverage. That's a $10,000 position.
- Bitcoin rises 5%: your position gains $500, or 50% of your $1,000.
- Bitcoin falls 5%: you lose $500, half your deposit.
- Bitcoin falls about 10%: your $1,000 is nearly gone. The exchange closes your position before that point. That's liquidation.
The exact liquidation price depends on the exchange's margin rules and fees. Work yours out with the crypto liquidation calculator before you enter. A math example, not a promise.
Why it matters
- Leverage cuts both ways. Crypto can move 10% in hours, so high leverage leaves very little room.
- Funding costs add up when you hold for days. See Funding rate.
- Cascades. When many leveraged traders get liquidated at once, their forced orders can push price further, fast. That's why perps markets see sudden spikes.
A common mistake
Picking leverage first, then the stop. Do it the other way round. Find where your stop belongs on the chart, decide how much you're willing to lose (many use about 1% of the account), and let that set the position size. Leverage is just how much deposit the exchange holds. Our leverage and margin guide explains the difference.
Questions
Why are they called perpetual?
Because they never expire. You can hold one as long as you keep enough margin and pay or receive funding.
Can you lose more than you deposit on perpetual futures?
Most crypto exchanges liquidate positions before your balance goes below zero, but in very fast moves the fill can be worse. Rules differ by exchange, so read them.
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