Perpetual Futures Contract is a derivative product that is very similar to the Traditional Futures contract but has no expiry date and mimics margin spot market trading. This page will navigate you through the main attributes of the Perpetual Futures contract.
- Entry price
- Position Size
- Liquidation price
- Close Position
- Index Price
- Mark Price
- Funding Rate
- Next Funding in
The leverage level (up to 10x) you select will impact the initial margin that you have to deposit prior to opening a position. You can select your leverage level at the time you submit your order. For example, if you want to go long 1 BTC contract at 9100 USDT using leverage 1x (that is no borrowing), then you have to have 9100 USDT available on your account to pay. However, if you use 10x leverage, then you will only need 910 USDT available on your account. 10x leverage means 10x profits, if market conditions are favourable, but it can also lead to potential losses, if market conditions are unfavourable.
Entry price is an average price you opened your current long/short position at. For example, if you shorted 1 BTC contract at 9200 USDT and 1 BTC contract at 9000 USDT, then the Entry price would be 9100 USDT per 2 BTC contracts.
This is the total number of contracts you entered in at a specified price. For example, if you go long 1 BTC contract at 9100 USDT, then the Position size will be 1. A plus in front of the position also indicates that you longed an asset, while a minus indicates that you shorted it.
Initial margin is the up-front value you must hold on your account to open a position (this will also depend on the leverage you choose). For example, if you want to go long 1 BTC contract at 9100 USDT using 1x leverage (no borrowing), then your initial margin will be 9100 USDT (9100USDT/1x=9100USDT), but if you choose 10x leverage, then your initial margin will only be 910 USDT (9100USDT/10x=910USDT). The initial margin acts as a collateral for your leveraged position at the time of opening. As you open more contracts in the same asset, the ‘Margin’ field will display a collective margin for all contracts in this asset, that is the sum of their initial margins. If the market goes against you and your margin becomes thin, then you can always increase it to avoid auto liquidation of your position (please, refer to the Liquidation Price section below for more information on this).
This is unrealised profit or loss on your position that is calculated as ((Mark price - Entry price) * Position size). PnL will be highlighted in green, if you gained on the position and in red, if you lost on it.
This is Return on Equity that is calculated as ((PnL / by the Margin) * 100%). This figure shows how much you earned or lost in percentage terms relatively to the money you invested in this position.
If the Mark Price falls below (when you long a contract) or raises above (when you short a contract) the Liquidation Price, then your position will be automatically liquidated. This is because at the moment of liquidation your collateral is running low (initial margin), so we have to close your position to prevent further losses on your side. We suggest that you closely watch both Liquidation and Mark prices and adjust your Margin accordingly.
You can also adjust your Margin by going to the Margin tab in the position box, pressing a pencil to change and adjusting it accordingly. The higher the margin, the further is the liquidation price from the Entry price, so the market price can fluctuate more without your position being liquidated.
We calculate your liquidation price as (Entry Price - Direction * (Initial Margin/Position Size - Entry Price * Maintenance Margin Rate)).
A maintenance margin is 5% regardless of your leverage and position size. Maintenance margin is the proportion of your position you must hold to keep your position open. Maintenance margin will protect other traders that entered in the contract with you, in case you become insolvent. Remember, maintenance margin will stay locked in your account, it doesn’t act as a fee to the exchange.
You can close your position here by specifying a price you want your contract to be closed at and pressing Limit that will be filled as soon as the market will hit it. Alternatively, you can press Market and close your position at the market price. Remember, market orders are subject to potential slippage.
The Index Price is a volume weighted average of prices on major Spot Exchanges. The Exchanges we use are:
We use the Index Price instead of the actual asset spot price because spot prices on different exchanges often differ or may demonstrate sudden spikes. This is why an Index Price acts as a fair equivalent of the underlying asset price. In case of connectivity problems or exchange’s outages, we apply additional measures to protect the Index Price from poor market performance:
- If more than 1 exchange’s price deviates 5% or more from the median of other exchanges’ price, the median price of all price sources will be used as the index value instead of the weighted average.
- If we can’t access the data feed for an exchange and this exchange has trades in the last 10 seconds, we will take the last trade price for index calculation.
- If one exchange has no updates for 10 seconds or the latest price of an exchange deviates more than 5% from the median of other exchanges’ price, the weight of this exchange will be zero when calculating the weighted average.
Index Price can be considered a fair “Spot Price”, while the Mark Price can be thought of as a fair Perpetual Futures contract price. Mark Price is a better estimate of the ‘true’ value of the contract, compared to Perpetual Futures prices, because the Perpetual Futures prices are subject to supply and demand and thus are more volatile in the short term.
The Perpetual Futures contract doesn’t have an expiry date, so investors pay and receive Funding every 8 hours as a price convergence mechanism between the Index Price (fair Spot Price) and the Mark Price (‘true’ value of the contract). So the difference between the Mark Price and the Index Price is a premium that is a proportion of the funding rate that is left until the next funding. The formulas look as follows:
Premium = FundingRate * (Time Until Funding / 8)
Mark Price = Index Price ∗ (1 + Premium)
Mark Price is used for an Unrealized PnL calculation that is calculated as ( in USDT):
- Net short position: Unrealized PnL = (Entry Price − MarkPrice) × Size
- Net long position: Unrealized PnL = (MarkPrice − Entry Price) × Size
As Unrealized PnL is the primary driver of liquidations, and as the Perpetual Futures Contract allows for highly leveraged positions, it is important to ensure that the Mark Price doesn’t unfavourably deviate too much from the Entry Price to avoid unnecessary liquidations. Note that Realized PnL is still based on the actual Perpetual Futures contract market prices.
This is a percentage of a position a contract owner pays or receives at the end of a Funding round. Because the Perpetual Futures contracts don’t have an expiry date, the Funding Rate acts as a mechanism of price convergence between the Mark price and the Futures price. If the rate is positive, then buyers will pay sellers, if the rate is negative, then sellers will pay buyers. You will only pay or receive Funding, if you hold an open position at the end of the Funding round. For example, if you hold a long position in 1 BTC Futures contract at 9100 USDT Entry Price and the Funding Rate is 0.01%, then, when the Funding round ends, you will pay 0.91 USDT (9100USDT * 0.01% = 0.91 USDT).
Next Funding in
This is the time until the next Funding Round. When the timer hits 0, contract owners will exchange the Funding Amounts based on the Funding Rate and their Position Value. Your position will remain open as long as you wish (you don’t need to open the contract again at the end of each Funding Round), if all margin requirements are satisfied. Funding history could be observed in the «Futures History» tab.