Data as of October 1, 2026. Perpetual contracts are complex instruments and may be liquidated rapidly. Funding rates and mark prices change without notice. Leverage magnifies gains and losses. Fees, network costs, and slippage reduce returns. Past performance is not indicative of future results.
Unlike buying an asset directly (spot trading), a perpetual contract lets you profit whether the price rises or falls, and lets you use leverage to control a larger position than your account balance alone would allow.
What is the difference between perpetual trading and spot trading?
When you buy an asset through spot trading, you own it directly. Buy Bitcoin at $100, sell at $110, and you’ve made $10. Perpetual trading works differently: instead of buying the asset, you open a position based on whether you expect its price to rise or fall. You never own the underlying asset — you’re trading its price movement. See What Is Spot Trading?.
Spot Trading | Perpetual Trading | |
|---|---|---|
What you own | The actual asset | A contract tracking the price |
Profit direction | Only when price rises | Either direction (long or short) |
Expiry | None — hold indefinitely | No expiry, but funding applies |
Leverage | Not used by default | Commonly used |
What are long and short positions?
Perpetual trading lets you take either side of the market:
Long position — you profit if the price rises.
Short position — you profit if the price falls.
If Bitcoin is at $100 and you go long, your position gains if the price rises to $110 and loses if it falls to $90. A short position works in reverse. The simplest way to remember it: a long position benefits when the price rises; a short position benefits when the price falls.
Why is it called “perpetual” trading?
Traditional futures contracts have an expiry date — at some point they must be settled or rolled into a new contract. A perpetual contract has no fixed expiry date, so you can keep a position open indefinitely, closing it whenever you choose (or having it closed automatically if your account can no longer support it).
Because there’s no expiry to keep the contract’s price aligned with the real market, perpetual contracts use a mechanism called funding — a periodic payment exchanged between long and short holders — to keep the perpetual price close to the underlying price.
What is leverage in perpetual trading?
Leverage lets you open a position larger than the funds you use to support it. With $100 and 5× leverage, you can open a $500 position — and your profit or loss is calculated on the full $500, not just your $100.
Your funds | Leverage | Position size | 1% move |
|---|---|---|---|
$100 | 5× | $500 | ±$5 (5% of your $100) |
$100 | 20× | $2,000 | ±$20 (20% of your $100) |
Leverage doesn’t make the market move more — it makes the same price move create a larger gain or loss for you.
What is liquidation?
When you use leverage, your account must maintain enough value to support the position. If the market moves too far against you and your account can no longer safely support the trade, the position may be automatically closed. This is called liquidation.
The higher the leverage, the less room the market has to move against you before liquidation becomes possible. Liquidation is different from a stop-loss: a stop-loss is an exit level you choose in advance, while liquidation is an automatic closure triggered when your account can no longer support the position.
Key takeaways
Perpetual trading means trading an asset’s price movement, not owning the asset.
You can go long (profit when price rises) or short (profit when price falls).
Perpetual contracts have no expiry — funding payments keep the price aligned instead.
Leverage amplifies both gains and losses.
Liquidation is automatic closure when your account can’t support the position — not the same as a stop-loss.