Perpetual Futures
A leveraged derivative contract that tracks an asset’s price with no expiration date.
Also called: perps · perpetual swap · perp
Written by Javier Sánchez Ros
In plain language
Perpetuals behave like futures but never settle. They stay tethered to the spot price through a periodic funding payment between longs and shorts.
They offer high leverage — often up to 100x — which is the core reason they dominate crypto trading volume and the core reason accounts are destroyed on them.
Because there is no expiry, a position can be held indefinitely, accruing funding costs the whole time.
Worked through
$500 of margin at 20x on a bitcoin perpetual
- Margin posted
- $500
- Position controlled
- $10,000
- Move that wipes the margin
- 5%
- Typical daily range in BTC
- 2–4%
Twenty times leverage means a 5% adverse move consumes the entire $500, because 5% of $10,000 is $500. The exchange does not wait for that number exactly — maintenance margin and fees mean the position closes slightly earlier.
Put that next to how bitcoin actually behaves and the problem is obvious. A 2–4% daily range is ordinary. The position is not exposed to a crash; it is exposed to a Tuesday.
The leverage slider is the part that misleads. It reads like a setting for how aggressive you want to be, when what it actually sets is how close the exit is to the entry. Choosing 20x is choosing a 5% stop — one that the exchange places, that ignores your chart, and that closes the position for good rather than letting it come back.
Why it matters
Perpetuals make it trivially easy to open a position far larger than your account. The position size math matters more here than in any other instrument.
Common mistakes
- Choosing leverage first and discovering the liquidation price afterward.
- Holding a perpetual for weeks without accounting for accumulated funding.
- Treating maximum available leverage as a recommendation.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A recurring payment between long and short holders that keeps a perpetual near spot price.
The price at which a leveraged position is forcibly closed because margin is exhausted.
Using borrowed capital to control a position larger than your account balance.
The capital your broker requires you to post to open and hold a leveraged position.
A market where assets are bought and sold for immediate delivery and full ownership.