Perpetual futures are the most traded product in crypto, and they're now used for stocks and commodities too. If you've seen people talk about "perps", going 10x long or getting liquidated, this is what they mean.
This guide explains what a perpetual future is, how it tracks a price without ever expiring, and what to understand before you trade one.
A futures contract that never expires
A traditional futures contract is an agreement to buy or sell an asset at a set price on a set date. Oil futures for December, S&P 500 futures for March. When the date arrives, the contract settles and traders who want to stay in have to roll into the next one.
A perpetual future drops the expiry date. You open a position, and it stays open until you close it or it gets closed for you. That makes perps simple to use: you just pick a market, a direction and a size.
You never own the underlying asset. A BTC perp gives you exposure to the price of bitcoin without holding any bitcoin, and an NVIDIA perp tracks NVIDIA's stock price without you owning shares.
Long and short
Going long means you profit if the price rises. Going short means you profit if it falls. Shorting is as easy as going long, which is one of the main reasons traders use perps. You can bet against an asset, or hedge something you already hold, without borrowing it first.
How perps stay close to the real price
Without an expiry date, something has to stop the perp price drifting away from the asset it tracks. That something is the funding rate.
Every so often, traders on one side of the market pay traders on the other. When the perp trades above the underlying price, longs pay shorts, which makes it less attractive to be long and pulls the price down. When it trades below, shorts pay longs. The rate changes with market conditions, and it's a real cost or income on positions you hold for a long time.
Leverage and margin
Perps are traded on margin. You put up collateral and control a position larger than it. With 10x leverage, $100 of collateral controls a $1,000 position, so a 1% price move changes your position's value by about 10% of your collateral.
That works in both directions. Leverage magnifies losses exactly as much as gains, and it's the single biggest reason new traders lose money on perps.
Liquidation
If a position moves far enough against you that your collateral can no longer cover the loss, it gets liquidated: closed automatically, and you lose the margin behind it. The higher your leverage, the smaller the move needed to trigger it. At 20x, a move of roughly 5% the wrong way is enough.
A stop loss closes your position at a level you choose, before it gets that far. A take profit does the same on the way up. Setting both before you enter is one of the simplest habits that separates planned trades from gambles.
What you can trade as perps
Crypto majors like Bitcoin, Ethereum, Solana and Hyperliquid are the classic perp markets. The same structure now covers stocks like NVIDIA and Tesla, indices like the S&P 500, and commodities like gold, silver and crude oil. Because they settle onchain, these markets trade 24/7, including when traditional exchanges are closed. Our guide to trading stocks 24/7 goes into that in detail.
Trading perps on Fraction AI
On Fraction AI, perpetual futures route to Hyperliquid, with more exchanges coming soon. Before you open a trade, you can see which AI trading agents are long or short in that market and how they've performed. After you open it, the agents keep watching the position and show whether they're holding, reducing or exiting.
Market and limit orders, take profit and stop loss are all supported, and paper trading lets you practice with a practice balance before using real funds.
A simple checklist before your first perp trade
Pick your side for a reason. Know why you expect the price to move.
Keep leverage low. Start well below the maximum. Lower leverage leaves room for normal price swings.
Set a stop loss. Decide in advance how much you're willing to lose.
Size small. Your first trades are for learning how perps behave, not for making money.
Trading perpetual futures with leverage is risky, and you can lose your entire margin on a position. Only trade with money you can afford to lose.
