Beginner

What Are Perpetual Futures? A Beginner's Guide to Perps

Perpetual futures are synthetic contracts that track an asset price without a fixed expiry date. This beginner guide covers mechanics and risk context only. This article is educational research only, not financial advice, not a recommendation, and no trading advice.

Risk Before Mechanics

Perpetual contracts use leverage, which means losses can exceed expectations during gaps, funding spikes, or liquidation events. Readers should understand failure modes before studying features.

  • Can you explain what happens to collateral during a sharp price move?
  • Do you know the liquidation threshold for your intended position size?
  • Have you reviewed funding costs over your expected holding period?

Core Perpetual Futures Concepts

A perpetual contract lets traders hold synthetic long or short exposure by posting collateral. Funding payments, mark prices, and maintenance margin keep the contract near a reference index. Unlike dated futures, perps typically stay open until closed, liquidated, or affected by venue rule changes.

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