What a perpetual contract is
A perpetual future is a derivative that tracks the price of an asset without ever expiring. You never own the coin; you hold an agreement whose value moves with the index price. That lets you go long or short with the same ease, and to use leverage, which multiplies both the gain and the loss.
Because there is no expiry to force convergence, perpetuals use a funding mechanism: every eight hours, longs pay shorts or shorts pay longs depending on whether the contract trades above or below spot. Funding is a cost of carry that quietly decides whether a slow winning position is actually profitable.
Margin modes and leverage
Isolated margin confines your risk to the collateral assigned to that single position: if it liquidates, only that margin is gone. Cross margin shares your whole futures balance across positions, which delays liquidation but puts the entire balance at risk. Beginners should use isolated margin without exception.
Leverage does not increase your risk by itself — position size does. A 1,000 position with 10x leverage requires 100 of margin, and it is the 1,000 exposure that determines your loss per percent move. Choosing 20x and then risking a tenth of the account per trade is what destroys accounts, not the number on the slider.
Opening a position step by step
Transfer funds from Spot to the USD-M Futures wallet. Select the pair, set margin mode to Isolated and pick a conservative leverage such as 3x to 5x. Enter your size, then immediately attach a stop-loss and a take-profit as reduce-only orders, before the position can move against you.
Check the liquidation price the platform displays. If it sits inside normal daily volatility for that asset, your leverage is too high — reduce size until the liquidation price is far beyond your invalidation level, so your stop is always hit first.
Liquidation and maintenance margin
Maintenance margin is the minimum equity the exchange requires to keep the position open. When your margin ratio reaches 100 percent, the liquidation engine closes the position and you lose the assigned collateral plus fees. Larger positions fall into higher risk tiers with stricter maintenance requirements, so the same leverage is more dangerous at size.
Never treat the liquidation price as a stop. It is the point where the exchange takes the decision away from you, always at the worst possible moment, often during a wick that reverses seconds later.
Practical rules for leverage
- Start on testnet or with the smallest possible size for at least a month.
- Isolated margin, low leverage, stop-loss attached at entry.
- Risk one percent of account equity per trade regardless of leverage.
- Avoid holding leveraged positions through major macro announcements.
- Watch funding: paying 0.1 percent every eight hours is 0.3 percent a day against you.
- Take partial profit at 1R and move the stop to breakeven on the rest.