Master perpetual futures trading.
Everything you need to know about perpetual futures — from basic mechanics to advanced strategies. Designed for both beginners and experienced traders.
In this guide
1. What are perpetual futures?
A perpetual futures contract is a derivative that lets you trade an asset's price movement without ever taking delivery — and unlike traditional futures, it never expires.
Perpetual futures (often called "perps") were popularized by crypto exchanges as a way to provide leveraged exposure to digital assets without the complications of expiry dates. You can hold a position open indefinitely as long as you maintain enough margin.
Key characteristics
No expiry: Hold positions for minutes, days, or months
Leverage: Trade with up to 200x your initial capital
Long or short: Profit from price going up OR down
Funding rate: A small fee exchanged between longs and shorts every 8 hours to keep prices anchored to spot
2. Leverage and margin
Leverage amplifies both profits and losses — understand it before you use it.
When you open a position, you don't need to put up the full notional value of the contract. Instead, you post margin — a fraction of the position size that acts as collateral.
Initial Margin (IM)
The amount you commit when opening a position. With 10x leverage, IM = 10% of position size.
Maintenance Margin (MM)
The minimum equity required to keep the position open. If equity drops below MM, you get liquidated.
3. Order types
The right order type at the right moment can make or break your strategy.
Market Order
Executes immediately at the best available price. Use when speed matters more than price precision. Counts as a taker order (higher fees).
Limit Order
Executes only at your specified price or better. Acts as a maker (lower fees) when it provides liquidity to the order book.
Stop Limit / Stop Market
Triggers when the price reaches your stop level. Stop Limit places a Limit order at trigger; Stop Market places a Market order. Useful for entries on breakouts or stop-losses on existing positions.
Take Profit / Stop Loss
Automatically closes part or all of your position when the price hits your target or stop level. BitCore supports both Entire (full position close) and Partial (close a specific size).
4. Liquidation explained
Liquidation is the worst outcome — let's make sure you understand exactly when and why it happens.
Liquidation occurs when your position's losses consume so much margin that your equity drops below the maintenance margin requirement. The exchange forcefully closes your position to prevent further losses to the platform.
Isolated Mode
Each position has its own dedicated margin. Only that margin is at risk. Liquidation closes just that one position.
Cross Mode
All cross positions share the same wallet as collateral. A single bad position can drain your entire account in a cascade liquidation.
5. Funding rate mechanics
A periodic payment that keeps perpetual prices anchored to the spot index.
Since perpetual contracts never expire, exchanges use a funding mechanism to keep contract prices aligned with the underlying spot price. Every 8 hours (00:00, 08:00, 16:00 UTC), longs and shorts exchange a small payment based on the funding rate.
If funding rate is -0.02% and you hold a 10,000 USDT short: You pay 2 USDT to long holders.
You only pay or receive funding if you have an open position at the exact funding moment. Closing your position 1 minute before funding means you skip that round.
6. Common strategies
A starting point for new traders — refine these to fit your style.
Trend following
Identify the dominant direction (using moving averages, higher highs/lows, etc.) and only take trades in that direction. Use stop losses just below recent swing lows for longs (or above swing highs for shorts).
Range trading
When price oscillates between clear support and resistance, buy near support and sell near resistance. Best in low-volatility markets. Stop losses go just outside the range.
Breakout trading
Wait for price to decisively break a key level (with volume). Enter in the direction of the breakout using a Stop Market order placed slightly beyond the level.
Funding rate arbitrage
When funding rates are extreme (e.g., +0.05% per 8h), some traders take the opposite side and hedge on spot to collect funding payments while remaining delta-neutral. Advanced strategy — requires careful risk control.
7. Risk management
The single most important skill for long-term profitability.
Most new futures traders blow up their accounts not because they pick the wrong direction, but because they don't manage risk properly. A few rules to internalize:
- Never risk more than 1-2% of your account on a single trade.
- Always set a stop loss before entering. Know exactly where you're wrong.
- Lower your leverage. 5-10x is plenty for most setups; 100x is gambling.
- Don't average down on losers. If your thesis is wrong, get out.
- Keep a trading journal. Review your wins and losses to find patterns.
- Trade with the trend. Counter-trend trading has lower win rates.
- Take breaks after losses. Revenge trading destroys accounts.