Perpetual Futures Explained: How They Work and Why Traders Use Them

When you trade perpetual futures, a type of derivative contract that never expires and mimics the spot price of an asset through funding payments. Also known as perpetual contracts, they let you go long or short on Bitcoin, Ethereum, or other assets without ever owning the underlying coin. Unlike regular futures that expire on a set date, perpetuals keep going—making them the go-to tool for crypto traders who want to hold positions for weeks or months without rolling over contracts.

What makes perpetual futures work is the funding rate, a periodic payment exchanged between long and short traders to keep the contract price close to the real market price. If longs pay shorts, it means the market is overbought. If shorts pay longs, it means the market is oversold. This system keeps the price anchored without needing an expiration date. You also get leverage, the ability to control a large position with a small amount of capital, often up to 100x. That’s powerful—but it also means your position can be liquidated fast if the market moves against you. Most platforms auto-close your trade before you lose more than your collateral. That’s not a safety net—it’s a warning sign.

Perpetual futures aren’t for everyone. They’re used mostly by active traders who watch charts, track funding rates, and manage risk hourly. You won’t find long-term investors holding these contracts for years. But if you’re trading crypto on exchanges like Bybit, Binance, or OKX, you’re likely already using them—even if you didn’t realize it. The volume on these contracts often dwarfs spot trading. That’s because they’re flexible, always open, and let you profit whether the market goes up or down.

What you’ll find in the posts below aren’t guides on how to open a perpetual position. Instead, you’ll see real stories: exchanges that vanished overnight, scams disguised as high-yield futures, and traders who lost everything chasing leverage. You’ll learn why some platforms hide funding rates, how rug pulls exploit margin trading, and why a 10x leveraged trade can turn into a $0 balance in seconds. This isn’t theory. It’s what happens when people treat perpetual futures like a slot machine instead of a trading tool.