Perpetual futures in crypto trading are special types of derivatives that let you trade the price of cryptocurrencies without actually owning them, and the best part is they never expire. If you’ve seen traders talking about “perps,” this is exactly what they mean.
Unlike traditional futures contracts that come with an expiration date, a perpetual future stays open as long as you want, giving you the freedom to hold your position indefinitely. Traders love this because it allows them to speculate on price movements—up or down—using leverage, meaning they can control a larger position with a smaller amount of capital.
But here’s where it gets interesting: perpetual futures use something called funding rates, a mechanism that keeps the contract price close to the real market price of the coin. When the funding rate is positive, traders who are long (betting the price will go up) pay traders who are short (betting the price will go down), and when it’s negative, it works the opposite way.
This system creates balance and prevents the price of the perpetual contract from drifting too far from the actual spot market. For beginners, perpetual futures can be exciting because they offer flexibility, constant trading opportunities, and the chance to profit in both rising and falling markets.
However, they also come with higher risks—especially because of leverage. A small price move can lead to big gains, but it can also wipe out your position quickly if you’re not careful. That’s why understanding risk management, stop-losses, and position sizing is absolutely essential before diving in.
In short, perpetual futures give traders a powerful tool to participate in crypto price action, but they’re best used with patience, knowledge, and caution.