What is a Perpetual Contract?
A Perpetual Contract is a widely used derivative product in the digital asset market. Unlike traditional futures, perpetual contracts have no expiration date and can be held indefinitely until the user closes the position voluntarily or is liquidated by the system. The key characteristics include:
No Expiration Date Perpetual contracts never expire, allowing traders to hold positions long-term without worrying about contract rollover. Price Tracks Spot Market The price of perpetual contracts generally stays close to the spot price of the underlying asset (such as BTC, ETH). When the contract price deviates significantly from spot, the funding rate mechanism helps bring the price back toward equilibrium. Leverage Trading Supported Perpetual contracts allow high leverage, enabling users to control larger positions with smaller capital. Both potential profit and risk are amplified accordingly. Flexible Risk Management Users can set take-profit and stop-loss strategies to manage risk. Due to leverage, proper capital management is essential to avoid forced liquidation during volatility.
Position Mode Explanation
Cross Margin Mode
In cross margin mode, all positions under the account share the same margin pool.
If one position incurs large losses, it may consume available margin from other positions, creating the risk of liquidation across all positions.
Features:
• Shared risk
• Profit and loss influence each position
• A single losing position may affect the entire account
Isolated Margin Mode
In isolated margin mode, each position uses its own independent margin.
Even if one position hits liquidation price, only that position is affected, while the rest of the account remains safe.
Features:
• Each position bears its own risk
• Other account funds remain unaffected
• Suitable for stricter risk control
Position Opening Methods
Position Value-Based Opening Based on the “total position value,” the required margin is calculated according to the selected leverage.
Example:
• Position value: 20,000 USDT
• Leverage: 200×
⇒ Required margin = 20,000 ÷ 200 = 100 USDT
Price increases → amplified profit
Price decreases → amplified loss
USDT-Margined Opening (U-Margin) Uses USDT (or another stablecoin) as both margin and settlement currency.
Example:
• 1,000 USDT used as margin
• 10× leverage to open a BTC perpetual contract
Profits and losses are settled in USDT, and margin is paid in USDT.
This method is suitable for users who prefer stablecoin-based asset management.
Order Types Explanation
Market Order Executed immediately at the current market price, prioritizing transaction speed.
Advantages:
• Fast execution
• High fill probability
• No need to set price
Disadvantages:
• Actual filled price may differ from expectation
Limit Order Executed only when the market reaches the price specified by the user.
Advantages:
• More precise execution at target price
• Suitable for strategic trading
Disadvantages:
• May not be executed if market does not reach the set price
Trigger Order (Stop or Conditional Order) Activated only when the “trigger price” is reached, after which the actual order is placed.
Explanation:
• Requires setting trigger price + order price
• Margin is not occupied before the trigger
• If margin is insufficient when triggered, the order will be canceled automatically
Trigger orders are suitable for breakout strategies and reversal strategies.