Perpetual Futures Mechanics, Funding, Margin, and Leverage
Summary
The article introduces perpetual futures as contracts without a fixed expiration, in contrast with conventional futures that settle at a specified date. It says perpetual prices are linked to an underlying index based on spot prices and trading volume, and describes funding rates as a mechanism intended to keep the contract price near spot. It also defines margin as collateral posted to open a position and leverage as borrowed exposure that magnifies buying or selling power.
The guide then walks through transferring funds to a futures account, choosing a contract, setting margin mode and leverage, opening a long or short position, and later adjusting or closing it. It mentions demo trading as a way to practice without risking real funds. The discussion is introductory and includes platform-specific product descriptions and promotional claims; it does not analyze contract risks in depth. In particular, leverage increases loss and liquidation risk, and funding, margin rules, and available leverage can vary by contract and venue.
Key ideas
- Perpetual futures have no scheduled expiration, while conventional futures settle on a specified date.
- Funding payments help keep perpetual contract prices aligned with the underlying spot market.
- Margin is collateral for a position, while leverage increases the exposure controlled by that collateral.
- A basic trading workflow includes funding an account, selecting a contract, setting position parameters, and managing the open position.
- Demo trading can provide practice, but it does not remove the risks of live leveraged trading.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.