🔮 Perpetuals

What Are Perpetual Futures?

Perpetual futures let you speculate on an asset’s price movement without holding the underlying asset. Unlike traditional futures, they never expire, so you can hold your position as long as you meet the margin requirements. This makes them ideal for both short-term market plays and longer-term strategies.

How Perpetual Futures Track Spot Prices?

To keep the contract price aligned with the real market (or spot) price, Perplex uses funding rates, which are fully automated on-chain. This transparency means you can verify every transaction at any time.


  • If the perpetual trades above the spot price, long positions pay a small fee to short positions, nudging the perpetual’s price down.


  • If the perpetual trades below the spot price, short positions pay a funding fee to long positions, encouraging the price to rise.

Funding Rate Essentials

Funding rates are small, regular fees that long and short traders pay each other to help match the contract’s price to the real market price. If the perpetual trades above the spot, longs pay shorts; if it trades below, shorts pay longs—helping balance market prices over time.

Periodic Payments

Funding fees happen at set times (every hour on Perplex), which helps keep the contract price close to the real market price.

Positive vs. Negative Rates

  • Positive Rate: Long traders pay short traders.
  • Negative Rate: Short traders pay long traders.

Learn more about Funding Rates

Long & Short Positions

When trading perpetuals, you’re not actually buying or selling the asset directly. Instead, you open a long or short position:

  • You profit if the price goes up.
  • Example: Long BTC at $100,000. If BTC’s price hits $105,000, you can close the position and realize a $5,000 gain (minus fees).
  • You profit if the price goes down.
  • Example: Short BTC at $110,000. If BTC’s price falls to $105,000 you buy back at the lower price, pocketing a $5,000 profit.

Advantages & Risks of Perpetuals

Advantages

No Expiration

  • Hold positions indefinitely—no forced rollover or settlement date.
  • (Perfect for long-term strategies or simply riding market trends.)


Leverage Power

  • Multiply potential gains (and losses) using leverage. A 20x leverage turns a 1% price move into a potential 20% profit—but the reverse also applies.

Tip: Use leverage responsibly, especially if you’re new to margin trading.

High Liquidity

  • Hold positions indefinitely—no forced rollover or settlement date.
  • (Perfect for long-term strategies or simply riding market trends.)


Versatility

  • Profit from both rising and falling markets—go long if bullish or short if bearish.

Tip: A balanced approach to seize opportunities in any trend.

Risks

Leverage & Liquidation

  • Higher leverage magnifies both gains and losses.
  • A small negative price move can trigger liquidation if your collateral falls below margin requirements.


Funding Rate Costs

  • You pay small fees at regular intervals. These can add up if you use a lot of leverage or hold a position for a long time, and they can change without warning.
  • Rates fluctuate; be ready for unexpected costs.


Market Volatility

  • Because crypto prices can change very quickly, it’s important to watch your trades closely and use safety measures like stop-loss orders.

Tip: Always gauge your risk tolerance, size positions accordingly, and consider setting protective orders to limit potential downsides.

Ready to Explore Perpetuals?

Choose Your Market: Pick a pair (e.g., ETH/USDC).


Open a Long or Short: Anticipate price movements—go with your market outlook.


Monitor Funding: Keep an eye on funding rates, especially if you plan to hold a position longer-term.

Tip: All trades carry risk; trade responsibly and know your exposure.