LiquidityFlowMarket desk

FuturesHUB

Perpetual futures, one mechanism at a time

32 guides to the contract, the three prices on the ticket, funding, margin, and the costs that stack on a round trip. Each page has a diagram and a way to use the idea on an order ticket. None of them tells you which side to take.

Work the arithmetic on the tools workbook. The older screen-by-screen lessons remain on Learn.

The contract

What you hold, how linear and inverse differ, and how a long, a short, and a hedge are stored.

Diagram of a perpetual futures contract linking a spot hold, the contract, a funding clock, and the absence of an expiry date.

What a perpetual is

A perpetual futures contract tracks a spot index, never expires, and uses funding to pull the contract price back toward that index.

Split diagram comparing a linear perpetual that settles profit in USDT with an inverse perpetual that settles profit in the coin.

Linear and inverse contracts

Linear perpetuals settle profit in the quote asset, usually USDT. Inverse perpetuals settle profit in the coin and take margin in the coin.

Balance diagram of a long perpetual that gains when the mark rises and a short perpetual that gains when the mark falls.

Long and short

A long perpetual gains when the mark rises. A short perpetual gains when the mark falls. Both post margin, and both can be liquidated.

Stacked diagram of perpetual notional built from quantity times mark, then price change, fees, and funding.

Notional and PnL

Notional is the position's exposure. On a linear perpetual, profit is quantity times the price change, then fees and funding are applied.

Split diagram of one-way perpetual mode, which keeps a single net position, and hedge mode, which keeps a long and a short at the same time.

Hedge mode

Hedge mode keeps a long and a short open on the same contract. One-way mode keeps a single net position and can flip you if the order is larger than the position.

Prices

Index, mark, last, and the premium between the perpetual and spot.

Flow diagram of spot prices from several venues combined into the index price used by a perpetual futures contract.

Index price

The index is a composite of spot prices from several venues. Perpetual funding and the mark price are built from it so one thin print cannot set the contract.

Layer diagram showing the index, the book premium, the mark price, and the liquidation check on a perpetual future.

Mark price

The mark is the fair price a venue uses for unrealized profit and for liquidation. It is built from the index and a premium, so a single wick on the perpetual book does not liquidate the book.

Layer diagram of the last trade on a perpetual book, the bid and ask, the chart candle, and a stop trigger.

Last price

The last price is the latest trade on the perpetual book. It is the print on the chart. It is not automatically the price used for liquidation.

Layer diagram of the spot index, the perpetual order book, the premium between them, and the funding input.

Basis and premium

Basis is the gap between the perpetual and the spot index. The premium index turns that gap into the input that funding is calculated from.

Funding

The rate, the clock, the payment, and which side pays.

Clock diagram of a perpetual funding rate moving from the premium, through a clamp, to a predicted rate at the funding timestamp.

Funding rate

The funding rate is the periodic percent longs and shorts exchange so the perpetual stays near the index. Positive usually means longs pay shorts.

Clock diagram comparing one-hour, four-hour, and eight-hour perpetual funding intervals and the number of payments per day.

Funding interval

The funding interval is how often the payment occurs. Eight hours is common. Some contracts settle every hour or every four hours.

Stacked diagram of a perpetual funding payment built from notional, the realized rate, each interval, and the resulting cashflow.

Funding payment

The funding payment is notional times the rate, once per interval you are open. Linear contracts pay it in the quote asset. Inverse contracts pay it in the coin.

Balance diagram showing longs paying shorts when the perpetual funding rate is positive and shorts paying longs when it is negative.

Who pays funding

Longs pay shorts when the rate is positive. Shorts pay longs when it is negative. The exchange routes the payment. The contract specification wins if the sign is defined differently.

Margin and liquidation

Initial margin, maintenance, leverage, isolated and cross, and the engine that closes a position.

Stacked diagram of initial margin on a perpetual, from notional divided by leverage, plus a fee buffer.

Initial margin

Initial margin is the collateral required to open a position. On a simple linear ticket it is about notional divided by leverage, plus any fee buffer the venue adds.

Stacked diagram of perpetual maintenance margin as the floor under position equity, checked at the mark price.

Maintenance margin

Maintenance margin is the minimum collateral that keeps a position open. Falling through it starts liquidation. It is lower than initial margin and it rises in higher risk tiers.

Ladder diagram of perpetual leverage showing a fixed notional, more margin, less margin, and a closer liquidation price.

Leverage

Leverage is notional divided by margin. It changes the collateral you post and the distance to liquidation. It does not change the profit on a fixed notional.

Split diagram of isolated margin fencing collateral inside one perpetual position while the rest of the wallet stays outside.

Isolated margin

Isolated margin assigns a fixed collateral balance to one position. A loss that consumes it liquidates that position and leaves the rest of the wallet alone.

Stacked diagram of cross margin, where one wallet balance backs several perpetual positions through shared equity.

Cross margin

Cross margin lets every position in the wallet draw on the same balance. One winner can support another loser. A loser can also spend the whole wallet.

Layer diagram of a perpetual entry, a stop, the LiquidityFlow liquidation sketch, and the venue ticket's liquidation price.

Liquidation price

The liquidation price is the mark at which position equity falls to maintenance. A sketch can show the shape. The ticket is the level the venue will use.

Flow diagram of a perpetual liquidation from a mark breach, through the engine and the closing fill, to any residual.

The liquidation engine

When the mark breaches maintenance, the venue closes the position, often charges a liquidation fee, and sends any residual to the insurance fund.

Stacked diagram of a perpetual insurance fund filled by liquidation fees and used to cover bankrupt deficits so winners are paid.

Insurance fund

The insurance fund absorbs losses when a liquidated account goes bankrupt, so winning traders can still be paid. Its size is published by the venue.

Queue diagram of auto-deleveraging on a perpetual, ranking the most profitable and most levered positions first after the insurance fund is exhausted.

Auto-deleveraging

Auto-deleveraging closes profitable positions when the insurance fund cannot cover a bankrupt liquidation. Rank usually favors closing the most profitable, most levered accounts first.

Ladder diagram of perpetual risk-limit tiers, where a larger notional requires more maintenance margin and allows less leverage.

Risk limits

Risk limits step a larger notional into a higher maintenance rate and a lower maximum leverage. The tier, not the advertisement, sets the cap on your position.

Orders

Limit, market, stop, post-only, reduce-only, and the order of fields on a ticket.

Ticket diagram of perpetual order types: a resting limit, a market order that takes, a stop that waits, and a stop-limit that can miss.

Order types

Limit orders rest on the book. Market orders take liquidity now. Stop and stop-limit orders wait for a trigger, then send one of those two.

Ticket diagram of post-only, which rejects an order that would take liquidity, and reduce-only, which rejects an order that would open a new position.

Post-only and reduce-only

Post-only keeps an order from taking liquidity. Reduce-only keeps an order from opening or flipping a position. They solve different mistakes.

Flow diagram of a perpetual stop order from the trigger source and trigger price to the order it sends and the fill or the miss.

Stop orders

A stop waits for last, mark, or index to touch a trigger, then sends a market or limit order. The trigger and the fill are two different events.

Ticket diagram for reading a perpetual order screen: mark last and index, the funding countdown, margin mode, and liquidation price.

Reading the ticket

A perpetual ticket shows mark, last, index, funding countdown, margin mode, leverage, and liquidation price. Read them in that order before you trust the buy button.

On the desk

Open interest, size from a risk budget, fees, slippage, and the stack of all four.

Two-column diagram of perpetual open interest rising when a new long and short open, while volume can rise even when open interest does not.

Open interest

Open interest is the stock of outstanding contracts. Volume is the flow of trades. A busy tape can leave open interest unchanged, and a quiet tape can increase it.

Stacked diagram of perpetual position size, from a dollar risk and a stop distance to notional, then to margin set by leverage.

Position size from risk

Choose the dollars you can lose and the distance to your stop. Notional equals that loss divided by the distance. Leverage then sets margin, not the loss.

Stacked diagram of perpetual trading fees on the open fill and the close fill, split by maker or taker, from a dated schedule.

Perpetual fees

Perpetual trading fees are maker and taker rates on notional, charged when you open and again when you close. Funding is a separate cashflow. Published schedules on this desk are dated.

Order-book diagram of perpetual slippage from the mid price, through the size you trade, to the impact price and the average fill.

Slippage

Slippage is the distance between the price you used in the plan and the average price the fill actually got. It grows with size, with market orders, and with thin books.

Stacked diagram of perpetual trading costs: the open fee, the close fee, funding across the hold, and slippage on the fills.

How costs stack

A perpetual round trip stacks the open fee, the close fee, the slippage on both fills, and the funding for every interval you hold. Liquidation adds a different fee again.