What are perpetual futures?
Perpetuals are where most crypto volume happens and where most beginner accounts end. Nothing about the product is dishonest; it simply does exactly what leverage does, faster than intuition can follow.
How does a contract with no expiry stay near spot?
Through the funding rate. If the perp trades above spot, longs pay shorts a small percentage of their position every funding interval (typically every eight hours); if it trades below, shorts pay longs. The payment makes the crowded side expensive to hold, which pulls the contract back toward the index. Traditional futures converge to spot at expiry; perps are nudged toward it continuously instead.
Spot or perps — what actually changes?
| Spot | Perpetual futures | |
|---|---|---|
| What you own | The coin itself | A contract; no coin changes hands |
| Direction | Long only (sell what you hold) | Long or short |
| Leverage | None (or borrowed on margin) | Built in: 2x to 100x+ |
| Holding cost | None | Funding every interval |
| Worst case | Coin goes to zero | Liquidation; position closed by the exchange |
| Who it suits | First accounts, long-term holders | Traders with a tested system and sizing discipline |
The curriculum keeps everyone on spot until Stage 4 for the reason in the last row.
What does a 10x position really cost?
Margin $1,000, leverage 10x, position $10,000 of BTC. A 5% fall in price is a $500 loss — half the margin, in one ordinary day. A 10% fall would exceed the margin, so the exchange liquidates somewhere before that, around a 9–9.5% move depending on maintenance margin. Now the holding cost: at a funding rate of 0.01% per eight hours, the position pays $1 three times a day, $3 a day, about $1,095 a year — 110% of the margin annually, for a rate that looks like a rounding error. At 0.05% funding during a crowded rally the same position pays $15 a day.
Who should not trade perpetuals yet?
Anyone who cannot, from memory, explain mark price, funding and their own liquidation level before opening the position; anyone without a written sizing rule that keeps liquidation far beyond the stop; and anyone whose spot journal does not yet show a repeatable process. The leverage will not make a method that loses on spot win on perps; it will make it lose faster. Our leverage lesson shows that at 100x an ordinary hour of price noise exceeds the distance to liquidation — the number on the button is a warning label, not a feature.
FAQ
Are perpetual futures the same as margin trading? No. Margin trading borrows money to buy the actual coin on spot. A perpetual is a separate contract that never involves the coin; leverage is built into the contract and funding replaces interest.
Can I lose more than my margin on a perp? On the major exchanges liquidation and an insurance fund normally cap the loss at your margin for isolated positions; in extreme gaps auto-deleveraging can occur. Cross-margin positions can draw on your whole account balance.
What leverage is safe for a beginner? The honest answer is 1x — spot — until a journal shows a repeatable process. When perps are justified, most professionals size so that liquidation sits far beyond the stop, which usually means single-digit leverage.
Turn a funding rate into dollars per day before you hold
Position size and rate in; daily, weekly and monthly funding cost out — the rent you pay to stay in.
Every key term, one roadmap
The whole slide course — ten free PDF parts, 328 pages.
Perpetuals sit at Stage 4 of the Primer Path on purpose. Spot vs futures lays the two products side by side, Lesson 7 works one leveraged position through to liquidation, and the DEX guide covers the self-custody venues where perps trade without an account.