In plain English
What Perpetual futures means
Unlike a dated futures contract, a perpetual futures position does not reach a normal expiry date. It can remain open while the trader meets the platform’s margin requirements, but it may be closed voluntarily, liquidated, or subject to the contract’s exceptional settlement rules. The trader generally does not receive the underlying cryptocurrency merely by holding the contract.
Why it matters
Perpetual futures can create exposure larger than the collateral posted, so gains and losses can move quickly. Funding, trading fees, the mark-price methodology, maintenance margin, and liquidation engine affect outcomes separately from the underlying asset’s spot-price movement. Contract terms vary materially by exchange and instrument.
Example
Assume a trader opens a $10,000 long perpetual position using $1,000 of margin, a simplified 10× exposure. If the contract’s marked value falls 5%, the position loses about $500 before trading fees and funding. That is a 50% loss relative to the $1,000 margin, and further losses could trigger liquidation under the venue’s rules.
Quick answers
Common questions
Why are perpetual futures called futures if they do not expire?+
They are futures-like derivatives because they create contractual price exposure rather than immediate ownership of the underlying asset. Their defining difference from standard futures is that they have no ordinary fixed expiry and use funding to support price alignment.
Do perpetual futures always settle in cryptocurrency?+
No. Contracts can be settled or margined in crypto, stablecoins, or another specified asset. The contract specification determines the collateral asset, quote currency, contract size, mark price, and settlement or closeout arrangements.
Sources