Perpetual futures are crypto's dominant trading instrument — daily perp volume dwarfs spot — because they solve three problems at once: leverage, short exposure, and no expiry to manage. They're also the instrument that liquidates thousands of over-leveraged accounts on every volatile day. This guide covers the machine and how to operate it without becoming a statistic.
What a perp actually is
A perpetual future is a contract tracking an asset's price with no expiry date. You post collateral (margin), choose exposure (leverage), and your profit or loss settles continuously against the mark price — an index-anchored fair value, not the venue's last trade, which protects you from being liquidated by a single manipulated print. Because there's no expiry, an anchoring mechanism keeps the perp near spot: funding payments between longs and shorts every interval.
The five numbers on every position
- Notional — total exposure: margin × leverage. Fees and funding are charged on this, not on margin.
- Margin — your posted collateral; the most an isolated position can lose.
- Leverage — notional ÷ margin. A multiplier on returns *and* on fees/funding relative to capital, as we show in How Leverage Changes Your Trading Costs.
- Liquidation price — where the exchange force-closes you. Know it before entry; estimate it with the liquidation calculator.
- Funding rate — the carry you pay or receive each interval while holding.
Margin comes in two modes: isolated (position risk capped at its own margin) and cross (whole wallet defends the position — fewer liquidations, worse worst case). Beginners should default to isolated.
Choosing a venue
The main split is CEX versus perp DEX. Bybit represents the CEX model: deep books, mandatory KYC, exchange custody, full product stack. Hyperliquid leads the DEX model: self-custody, no KYC, hourly funding, on-chain order book with CEX-grade speed. Lighter pushes the cost frontier with 0% maker/taker on a zk-rollup, and Phemex offers a very fast engine with an unusually cheap 0.01% maker rate. Fees, funding intervals and KYC status for ten venues are side-by-side in our exchange comparison.
A first trade, done properly
Suppose you're bullish SOL at $140 and would be wrong below $133 (−5%).
- Risk first: with a $5,000 account risking 1% ($50), a 5% stop distance implies $1,000 of notional — the position size calculator does this arithmetic.
- Leverage as bookkeeping: $1,000 notional needs just $100 margin at 10x — but the risk was set by the stop, not the leverage dial.
- Cost check: taker fees round trip ≈ $1.10 at 0.055%; funding at +0.01%/8h costs ~$0.30/day on $1,000. The fee calculator prices this across venues in one shot.
- Orders in, plan written: entry (prefer a resting limit — maker rates are 2–6x cheaper), stop at $133, target logged, liquidation price checked (far below the stop, or leverage is too high).
That's the entire craft in miniature: risk decided before entry, costs known, exits pre-committed.
The habits that keep accounts alive
- Never trade without a stop; never let the liquidation price *be* the stop.
- Keep effective leverage modest (3–10x covers almost every legitimate use).
- Check funding before multi-day holds — carry kills slow trades.
- Withdraw profits periodically; don't let the margin balance become the scoreboard.
- Accept that perps are high-risk instruments: leverage amplifies losses identically to gains, and most new leveraged traders lose money. Start with sizes whose total loss teaches cheaply.