Perpetual futures

Unlike traditional futures, which settle on a fixed date, a perpetual contract can be held indefinitely as long as margin requirements keep being met. The funding rate periodically nudges the contract price back toward the underlying spot price.

For example, a trader who opens a leveraged long position on a perpetual contract keeps that position open across as many funding periods as they like, with no forced settlement date — the position only closes when they choose to close it or when it's liquidated.

A common mistake is treating a perpetual futures position as equivalent to simply holding the asset on spot. Perps carry ongoing funding costs and liquidation risk that a spot holding never has, even when the price ends up moving in the trader's favor.