Perpetual Futures Terms, Funding, Margin, and Liquidation Risk
Summary
This glossary explains core futures concepts, including long and short positions, leverage, initial and maintenance margin, mark price, funding, and realized versus unrealized profit and loss. It distinguishes USDT-margined and coin-margined contracts and describes perpetual contracts as having no expiry, with funding helping align their prices with spot markets. It also covers market and limit orders, take-profit and stop-loss orders, position modes, margin modes, fees, risk limits, average entry price, and liquidation price.
The accompanying risk discussion emphasizes that leverage magnifies gains and losses, that isolated and cross margin allocate risk differently, and that traders should monitor the mark price and liquidation threshold. These are general educational definitions rather than a strategy or worked calculation. Some details, such as leverage ranges and funding intervals, are platform-specific and can change; readers should verify current contract rules before trading.
Key ideas
- Perpetual futures have no expiry, and funding payments help keep contract prices aligned with spot prices.
- Leverage and margin determine exposure, while maintenance requirements and mark prices affect liquidation risk.
- Isolated margin separates the collateral risk of a position, whereas cross margin shares account funds across positions.
- Market orders prioritize immediate execution, while limit orders execute only at the specified price or better conditions.
- Predefined take-profit and stop-loss orders can support position management but do not remove trading risk.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.