What are perps?
A perpetual future, or “perp,” is a contract that tracks the price of an underlying asset like cryptocurrency.
You do not own the underlying asset. Instead, you trade the direction of its price.
Price up: Gain if the price rises and lose if it falls
Price down: Gain if the price falls and lose if it rises
Perps do not have an expiration date. The position stays open until you close it, or until it is closed for you because your margin has been liquidated.
What perps are available?
Crypto perps are available, with more assets to come.
Every perp is named for the underlying asset that it tracks, the direction you have taken, and your leverage. For example, BTC Perps · Price up · 3x means the perp contract tracks Bitcoin; the direction is price increasing; and your leverage is three times the value of your margin.
What’s required to open a position?
You need to commit margin, choose a direction, and select your leverage.
Margin: The cash you commit to open and maintain the position. It’s held against the position and returned, plus or minus your profit and loss, when you close the position.
Direction: Whether you believe the price of the underlying asset will rise or fall.
Leverage: A multiplier on your exposure that you select when you open a position. Leverage multiplies the effect of every price move, in both directions. To trade the same instrument at a different leverage, open another position.
Risk Control: Your optional take-profit and stop-loss levels. Once either level is reached, your position will be closed automatically.
Position size: Margin multiplied by leverage. Your profit and loss is calculated on this amount, not on your margin alone.
Example:
You commit $100 of margin at 3x leverage. Your position size is $300:
If the price rises 5%, your position gains $15, a 15% return on your $100
If the price falls 5%, your position loses $15, or 15% of your margin
What are the risks?
Perps involve leverage and carry a risk of loss:
Leverage multiplies both gains and losses, so the higher the leverage, the higher the risk of liquidation of your margin
Prices can move sharply and potentially result in the closing of your position and liquidation of your margin before you have time to react
If your margin falls below the required level, your position is closed automatically and your margin is liquidated