What Are Perpetual Futures?

What Are Perpetual Futures?

October 5th, 2026
Prop Firm Education

Perpetual futures are derivatives that let traders take long or short exposure to a market without owning the underlying asset. Unlike traditional futures, they do not have a scheduled expiry date.

Traders usually call them perps, perpetuals, or perpetual contracts.

That lack of expiry is the main difference.

Traditional futures expire. Perpetual futures do not.

Because there is no scheduled settlement pulling the contract toward its underlying market, most perps use funding payments between long and short traders to help keep prices aligned.

Perpetual futures are most closely associated with crypto markets such as Bitcoin and Ethereum. However, they are no longer limited to crypto majors. Depending on the venue, traders can also find perpetual products linked to tokenized stocks, indices, commodities, metals, energy, and forex.

The same product is now beginning to appear more clearly in prop trading. Some firms allow traders to complete evaluations and trade simulated perpetual futures accounts using prices derived from live markets.

What Does “Perp” Mean?

Perp is simply shorthand for a perpetual futures contract or perpetual contract.

Traders may also come across:

  • perpetual futures
  • perpetual swaps
  • perpetual contracts
  • perpetuals
  • perps
  • crypto perps

These terms are often used for products built around the same basic idea: derivative exposure without the fixed expiry of a traditional futures contract.

What Are Crypto Perpetual Futures?

Crypto perpetual futures are perps linked to cryptocurrency markets such as Bitcoin, Ethereum, and other digital assets.

A BTC perpetual contract, for example, gives a trader exposure to Bitcoin's price without requiring them to buy Bitcoin in the spot market.

Traders can go long or short, use margin and leverage where permitted, and keep a position open without having to roll into a new contract simply because an expiry date arrives.

The trader still holds a derivative rather than the underlying cryptocurrency.

That distinction becomes important once funding, margin, liquidation, and platform-specific risk rules enter the picture.

How Do Perpetual Futures Work?

Perpetual futures combine these main ideas:

  • long or short exposure to an underlying market
  • margin and potentially leverage
  • a funding mechanism designed to help keep the contract close to the market it tracks

Going Long or Short

A trader goes long when they expect the market to rise and short when they expect it to fall.

If the market moves in the expected direction, the position gains value. If it moves against the trader, the position loses value.

Margin and Leverage

Perpetual futures are commonly traded on margin.

Margin is the capital supporting the position rather than the full notional value being controlled.

What Is the Funding Rate in Perpetual Futures?

The funding rate is one of the mechanics that separates perpetual futures from traditional futures.

Traditional futures have an expiry date. Conventional perps do not.

Funding helps compensate for that missing expiry mechanism by encouraging the perpetual contract to remain reasonably close to the market it tracks.

On many venues, funding payments pass directly between traders holding long and short positions.

Positive Funding

When funding is positive, long positions generally pay short positions.

This is commonly associated with the perpetual contract trading above its reference market.

Negative Funding

When funding is negative, short positions generally pay long positions.

That can occur when the perpetual trades below its reference market.

The payment creates an incentive on either side of the market that can help reduce the difference between the perpetual contract and its reference price.

Funding is therefore not simply another trading fee.

It is part of the mechanism that allows a contract with no scheduled expiry to remain anchored to the market it represents.

How Often Is Funding Paid?

There is no universal funding schedule.

Some exchanges calculate or settle funding hourly. Others use longer intervals, and the formula itself can vary between exchanges and products.

The useful questions are:

  • What is the current funding rate?
  • Is it positive or negative?
  • How often is funding settled?
  • When is the rate calculated and applied?
  • Can it change before the next funding period?
  • How does it affect account equity or P&L?

For prop traders, there is another question: whether simulated funding debits or credits are reflected in the account at all.

The important point is not to carry assumptions from one exchange into another.

Why Do Perpetual Futures Need Funding?

Traditional futures move toward expiry and settlement, while perpetual futures don’t.

Without another mechanism, a perpetual contract could drift too far from the market it is designed to track.

Funding helps counter that.

If demand for long exposure pushes the perpetual above its reference market, positive funding can make holding long positions more expensive while compensating shorts.

When short positioning pushes the perp below the reference market, negative funding can work in the opposite direction.

The formula varies by venue, but the broad objective to keep the perpetual futures price reasonably aligned with its underlying market is the same.

What Is Liquidation in Perpetual Futures?

Leverage allows a trader to control a position larger than the margin supporting it.

The trade-off is that losses can consume that margin quickly.

If an account no longer meets the provider's margin requirements, the position may be automatically reduced or closed.

That is liquidation.

How and when liquidation occurs depends on the provider and can be influenced by factors such as:

  • position size
  • leverage
  • entry price
  • maintenance margin
  • account equity
  • current or mark price
  • funding
  • fees
  • other open positions

Higher leverage generally leaves less room for the market to move against the position before margin becomes a problem.

That is why leverage should not be viewed only through the potential return it creates.

It changes the downside too.

What Is the Mark Price?

Some perpetual futures providers use a mark price when calculating unrealized P&L, margin requirements, or liquidation risk.

Rather than relying only on the most recent traded price, the mark price provides a separate reference value.

Its calculation may incorporate:

  • index prices
  • recent market prices
  • bid and ask data
  • fair-value calculations
  • basis adjustments

The methodology varies by provider.

Traders should remember that the price used for liquidation or risk calculations may not always be identical to the latest traded price shown on the chart.

Perpetual Futures vs Traditional Futures

The easiest way to see how perps differ is to compare them with traditional futures contracts.

FeaturePerpetual FuturesTraditional Futures
Scheduled expiryNoYes
Contract rolloverNo regular expiry rolloverRequired if continuing exposure beyond expiry
Long and shortYesYes
MarginCommonCommon
LeverageCommonCommon
Funding mechanismCommonNo perp-style funding mechanism
Contract monthsUsually no expiry-month sequenceSpecific contract months
Trading hoursOften 24/7 for crypto perpsDepends on exchange and product
Main operational issueFunding, margin, liquidationExpiry, rollover, contract selection

The biggest difference is expiry.

A traditional futures trader who wants to maintain exposure after the current contract expires may need to move into a later contract month.

That process is known as futures rollover.

Perpetual futures remove the scheduled rollover.

In its place comes a different ongoing consideration: funding.

Traditional futures traders need to understand expiry and contract selection. Perpetual futures traders need to understand funding, margin, leverage, and liquidation.

Do Perpetual Futures Expire?

Conventional perpetual futures do not have a scheduled expiry date.

That is their defining feature.

A Bitcoin perp doesn’t need to move from a September contract into December simply because the calendar changes.

But “no expiry” doesn’t mean the position lasts forever.

A trade can still be:

  • closed manually
  • stopped out
  • liquidated
  • closed because margin becomes insufficient
  • affected by platform risk controls
  • closed because of prop-firm drawdown rules
  • affected if the product is delisted or terminated

The contract may not have a scheduled expiry, but the position can still end.

Perpetual Futures vs Spot Trading

Perpetual futures are also different from buying the underlying asset.

If a trader buys Bitcoin in the spot market, they are buying the asset itself.

A Bitcoin perpetual position is a derivative linked to Bitcoin's price.

FeaturePerpetual FuturesSpot Trading
ExposureDerivativeUnderlying asset
Own the underlying assetNoTrader buys the asset
LongYesYes
ShortGenerally availableRequires extra structure on many venues
LeverageCommonDepends on venue/account
FundingCan applyNo perp funding
Liquidation riskCan apply when marginedNot part of ordinary unleveraged spot ownership
Scheduled expiryNoNot applicable

A BTC spot purchase and a BTC perp long may both benefit when Bitcoin rises.

They are still different products with different risk mechanics.

Perpetual Futures vs Crypto CFDs

This distinction becomes particularly important in prop trading.

A perpetual future and a crypto CFD can both provide leveraged market exposure without ownership of the underlying asset.

That does not make them the same instrument.

FeaturePerpetual FuturesCrypto CFDs
StructurePerpetual derivative marketContract with broker/provider
Scheduled expiryUsually noneUsually none
Price sourcePerp market / exchange-style pricingBroker or liquidity-provider pricing
Holding costFunding can applySwaps, financing, or broker-defined charges can apply
Typical platformsExchange or proprietary perp terminalMT5, cTrader, DXtrade, Match-Trader, TradeLocker
Long and shortYesYes
Prop useEmergingEstablished

A prop firm offering crypto is therefore not automatically offering perpetual futures. Traders comparing broader crypto access can also browse prop firms that offer crypto.

The product structure and platform still need to match.

Why Are Perpetual Futures Popular?

Part of the appeal is operational simplicity.

Because there is no scheduled expiry, traders do not need to keep moving their exposure from one contract month into another. They can also take long or short positions without owning the underlying asset, while margin and leverage can provide greater market exposure relative to the capital supporting the position.

Crypto has added another attraction: trading hours. Many crypto perpetual markets operate 24/7, and major Bitcoin and Ethereum perps can attract substantial trading activity.

The market is also becoming broader. Depending on the venue, perpetual products may now be linked to:

  • altcoins
  • stocks
  • indices
  • metals
  • energy
  • commodities
  • forex

That expansion is beginning to show up in prop trading too.

The advantages come with trade-offs. No scheduled rollover does not remove funding, leverage, liquidation, or liquidity risk.

What Are the Main Risks of Perpetual Futures?

Removing scheduled expiry does not remove trading risk.

Leverage and Liquidation

Leverage magnifies both gains and losses.

In a live margined position, enough adverse movement can reduce the account below its margin requirements and trigger forced position reduction or liquidation.

Funding

Funding can work for or against the position.

A trader can be correct on market direction and still give up part of the return through repeated funding payments.

Rates are not fixed either. They can change as positioning and market conditions change.

Volatility and Liquidity

Crypto markets can move sharply at any time, and not every perpetual market has the same depth as BTC or ETH.

Smaller or newer products may trade with wider spreads and thinner liquidity.

Platform and Venue Risk

Margin requirements, funding formulas, leverage, liquidation rules, maintenance periods, and price calculations can differ between providers.

Prop-Firm Rules

Prop traders also operate inside another layer of restrictions, which can include:

  • maximum drawdown
  • daily loss
  • consistency requirements
  • leverage limits
  • position-size limits
  • prohibited strategies
  • payout conditions

A perps trader therefore needs to understand both the market mechanics and the rules of the account being traded.

What Are Perpetual Futures in Prop Trading?

Perpetual futures are creating a newer category within funded trading.

A perpetual futures prop program generally lets a trader complete an evaluation and trade simulated perpetual contracts under the firm's rules.

Those contracts can use prices derived from live crypto or perpetual futures markets.

That does not necessarily mean the trader's order is being sent to the live exchange.

A prop account can therefore combine:

live-market pricing + simulated execution + real payout eligibility

depending on the firm's structure.

That distinction between price source and execution model is one of the most important things to understand when comparing perps prop programs.

How Does a Perpetual Futures Prop Account Work?

A typical structure may look like this:

  1. The trader selects an evaluation or account.
  2. The trader pays the applicable fee.
  3. Trading takes place on a simulated account.
  4. Perpetual contracts use pricing derived from live markets.
  5. The trader must reach the target while staying within drawdown and other rules.
  6. Passing can lead to a funded-stage account.
  7. The funded-stage account may also remain simulated.
  8. Eligible profits can be paid according to the firm's profit split and payout rules.

The broader prop model is familiar.

What changes is the instrument being traded and the mechanics that come with it.

Are Funded Perpetual Futures Accounts Live or Simulated?

They can be simulated.

Live pricing does not automatically mean live execution.

Because this category is developing quickly, traders should not assume every perps firm follows the same structure.

Traders can also browse crypto prop firms offering simulated funded accounts on Prop Firm Match

Why Liquidity Still Matters in a Simulated Perps Account

Simulation does not make the underlying market irrelevant.

If the account is using prices derived from a real perpetual market, the character of that market still feeds into the trading environment.

A deep BTC or ETH market may offer tighter pricing and greater depth.

A thinner altcoin or tokenized market may behave very differently.

Liquidity can influence:

  • spreads
  • price spikes
  • simulated fills
  • volatility
  • drawdown breaches
  • available leverage

That becomes increasingly relevant as perpetual futures expand into less mature asset categories.

Perpetual Futures Prop Trading vs Traditional Futures Prop Trading

The word futures appears in both, but the experience can be quite different.

FeaturePerpetual Futures PropTraditional Futures Prop
ProductPerpetual contractsExchange-listed futures
Scheduled expiryNoYes
RolloverNo normal expiry rollPeriodic rollover
FundingCan applyNo perp-style funding
Trading hoursOften around the clockExchange session hours
Price sourcePerps/crypto marketsFutures exchanges
PlatformsExchange-style or proprietary terminalsTradovate, NinjaTrader, Rithmic and similar futures platforms
Evaluation stageCommonly simulatedCommonly simulated
Funded stageCan remain simulatedCan be simulated or include live progression depending on firm

Neither model is inherently better.

They are different products with different operational and risk mechanics.

Traders comparing the traditional futures side can browse futures prop firms on Prop Firm Match.

How Prop Firm Match Distinguishes Perps from Crypto CFDs

This is one of the more important distinctions for traders researching crypto prop firms.

Not every crypto program is a perpetual futures program, so PFM Research looks at the underlying product and trading structure rather than the word “crypto” alone.

Platform structure is one signal. Programs running through conventional CFD platforms such as MT5, cTrader, Match-Trader, DXtrade, or TradeLocker are generally treated as crypto CFD programs unless stronger product evidence shows otherwise.

The firm's own product description also matters. If a firm explicitly describes its program as perpetual futures or perps, that provides stronger evidence of the intended instrument structure.

An exchange platform or proprietary terminal built around a named perpetual market can also support a perps classification.

What does not prove it on its own is:

  • crypto trading
  • 24/7 availability
  • exchange-derived pricing
  • no swap fees
  • a crypto-only asset list

The actual contract and trading structure are what matter.

Which Prop Firms Offer Perpetual Futures?

This is still an emerging category, so firm examples are better treated as a dated snapshot than a permanent list.

  • E8 Perpetuals
  • Breakout
  • Crypto Fund Trader, where the Bybit programs were classified as perps while other programs remained crypto CFDs
  • My Funded Perps, which had launched but was not yet listed on Prop Firm Match at the time of the research

The significance is less about the number of firms than the direction of the market.

Perpetual futures are beginning to appear as a distinct product category within prop trading rather than simply being grouped with generic crypto accounts.

Because that landscape can change quickly, the live Crypto and Perps section on Prop Firm Match is the better place to see the current list.

What Should Prop Traders Check Before Trading Perpetual Futures?

Account size and price are only the starting point.

1. Is It Actually a Perps Program?

Establish whether the account uses perpetual futures, crypto CFDs, or different instruments depending on the platform.

2. Is the Account Live or Simulated?

Exchange-derived pricing does not necessarily mean orders are executed on a live exchange.

3. What Is the Price Source?

Know which exchange or market provides the underlying pricing.

4. Which Assets Are Available?

A program may cover Bitcoin and Ethereum only, or extend into altcoins, tokenized stocks, indices, metals, energy, and forex perps.

5. What Leverage Applies?

Leverage can differ by asset. One headline figure should not automatically be assumed across every available market.

6. How Is Drawdown Calculated?

Look at daily loss, maximum drawdown, static versus trailing rules, balance versus equity calculations, and whether evaluation and funded-stage conditions differ.

7. How Does Funding Work?

Find out whether funding debits or credits appear in the account and how the underlying venue calculates them.

8. What Does Trading Cost?

The relevant costs can include commissions, maker/taker fees, spreads, funding, and platform charges.

9. How Do Payouts Work?

Payout frequency, profit split, minimum withdrawals, consistency rules, caps, and funded-stage conditions all shape how profits become eligible for withdrawal.

Traders can also compare prop firms that pay via crypto on Prop Firm Match.

10. Which Strategies Are Allowed?

Automation, copy trading, hedging, arbitrage, high-frequency trading, multiple accounts, and other trading behavior may be governed by separate program rules.

This is where a perps account starts to look less like a simple crypto product and more like a full prop trading structure.

Are Perpetual Futures Better Than Traditional Futures?

Not necessarily. Perpetual futures remove one operational issue, which is scheduled contract expiry.

They replace it with another ongoing mechanic, and that is funding.

Perps can appeal to traders who value no scheduled rollover, around-the-clock crypto markets, long and short exposure, and access to crypto-native or emerging multi-asset perpetual products.

Traditional futures offer a different environment built around established futures exchanges, standardized contract specifications, traditional futures platforms, defined sessions, and familiar index, commodity, rate, and currency markets.

The more useful question is not which structure is universally better.

It is which market mechanics fit the trader's strategy.

Are Perpetual Futures Good for Beginners?

Perpetual futures are relatively easy to explain.

That does not make them automatically easy to trade.

Removing expiry means one less futures concept to manage, but traders still need to understand leverage, margin, liquidation, mark price, funding, volatility, liquidity, fees, position sizing, and platform rules.

A prop account adds another layer, like drawdown, daily loss, consistency requirements, payout conditions, and prohibited strategies.

A beginner therefore needs to understand how the product works and how the prop firm's rules work around it before choosing an account.

Perpetual Futures FAQs

What are perpetual futures?

Perpetual futures are derivative contracts that allow traders to take long or short exposure to an underlying market without owning the asset. Unlike traditional futures, conventional perpetual futures do not have a scheduled expiry date.

What are perps in trading?

“Perps” is shorthand for perpetual futures or perpetual contracts.

How do perpetual futures work?

Traders take long or short positions, often using margin and leverage. Most perpetual futures use funding payments or a similar mechanism to help keep the contract price close to its underlying reference market.

Do perpetual futures expire?

Conventional perpetual futures do not have a scheduled expiry date. Individual positions can still be manually closed, stopped out, liquidated, or closed because of platform or account rules.

What is a perpetual futures funding rate?

The funding rate determines periodic payments associated with long and short perpetual positions. On many venues, positive funding means longs pay shorts, while negative funding means shorts pay longs.

How often is funding paid?

It depends on the provider and product. There is no universal funding interval.

Can perpetual futures be liquidated?

Yes. A live leveraged position can be liquidated if margin requirements are no longer met. Prop accounts can also fail because of firm-specific drawdown or loss rules.

What is the difference between perpetual futures and traditional futures?

Traditional futures have scheduled expiration dates and may need to be rolled into later contracts. Perpetual futures do not have scheduled expiry and commonly use funding to help keep the contract aligned with the underlying market.

What is the difference between perpetual futures and spot trading?

Spot trading involves buying or selling the underlying asset. Perpetual futures are derivatives that provide price exposure without ownership of that asset.

Are perpetual futures the same as crypto CFDs?

No. Both can provide leveraged exposure without ownership, but their product structures, platforms, price sources, and holding-cost mechanisms can differ.

What are perpetual futures in prop trading?

Perpetual futures prop trading allows traders to trade perps within an evaluation or funded-account structure. The account can be simulated even when pricing comes from live perpetual markets.

Do prop firms offer perpetual futures?

Yes. Perpetual futures are an emerging part of the prop trading market. Traders can review current Crypto and Perps Prop Firms on Prop Firm Match.

Are funded perpetual futures accounts live?

Not necessarily. In PFM Research's review, the core perps prop programs examined used simulated accounts at both evaluation and funded stages. Traders should check each current program before purchasing.

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