Crypto Futures Terms: Pricing, Margin, Orders, and Liquidation
Summary
This beginner guide explains the lifecycle and vocabulary of stablecoin-margined perpetual futures. It distinguishes long and short positions, leverage, opening and maintenance margin, position value, funding, and realized versus unrealized profit and loss. It also contrasts isolated and cross margin, and limit and market orders, with take-profit, stop-loss, closing, and liquidation concepts.
A central explanation separates mark, index, and last prices. The guide says the mark price is used to estimate unrealized profit and loss and to trigger liquidation, while the index aggregates weighted spot prices and the last price is the latest futures execution. Examples illustrate how available margin and liquidation levels can change as funds are added. The material is specific to the described exchange and focuses on its USDT- and USDC-margined perpetual products; it is educational terminology, not a trading strategy, and platform mechanics or contract details may differ elsewhere.
Key ideas
- Leverage magnifies both gains and losses, while maintenance margin sets a threshold for keeping a position open.
- Isolated margin assigns collateral to a position, whereas cross margin shares the margin balance across positions using the same asset.
- Mark price, index price, and last price serve different functions in valuation and risk monitoring.
- Funding payments are exchanged between long and short sides at scheduled intervals.
- A position can be liquidated when its margin falls below maintenance requirements, with the mark price used as a trigger.
- Limit orders specify a price, while market orders seek execution at prices currently available.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.