What Are Perpetual Futures? A Beginner's Guide to USDT-M vs Coin-M, Leverage, Mark Price and Funding
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Perpetual futures are the highest-volume product on any exchange — and the fastest way for beginners to lose money. They amplify a position with margin, never expire, and stay close to spot through funding payments. This guide covers the concepts you need before your first trade. Binance and OKX work essentially the same way, so everything here applies to both.
Perpetuals vs delivery futures vs spot
| Spot | Delivery futures | Perpetuals | |
|---|---|---|---|
| You own the coin | Yes | No | No |
| Expiry | None | Yes, settles at expiry | None |
| Can go short | No (needs borrowing) | Yes | Yes |
| Leverage | No | Yes | Yes |
| Extra cost | None | None | Funding |
USDT-margined vs coin-margined
- USDT-M: margin and P&L in USDT (or USDC). The most intuitive — the beginner's choice.
- Coin-M: margin in BTC, ETH and so on, P&L in the coin. Suits holders who want to hedge, but the margin itself shrinks when the coin falls.
Leverage and margin
- Position value = margin × leverage. 1,000 USDT at 10× is a 10,000 USDT position.
- A move of about 1 ÷ leverage against you wipes out the margin — about 10% at 10×, 5% at 20× (and liquidation happens earlier because of maintenance margin).
- Isolated margin risks only what you assign to the position; cross margin uses your whole available balance. Beginners should use isolated.
How liquidation prices are calculated and why bigger positions liquidate sooner: liquidation explained, or use the liquidation calculator.
Mark price vs last price
- Last price: the most recent trade on the contract.
- Mark price: a fair price derived from a spot index across several venues.
Liquidation and unrealised P&L use the mark price, not the last price, so a single abnormal trade can't liquidate everyone. That's why a wick on the chart sometimes doesn't liquidate a position, or vice versa.
Funding
Because perpetuals never expire, funding keeps them near spot: when the rate is positive longs pay shorts, when negative shorts pay longs. Settlement is usually every 8 hours (4 or 1 hour for some coins), and you only pay or receive if you hold a position at settlement.
For held positions funding often costs more than fees. Read funding rates explained and check live rates on both exchanges in the funding rate table.
Fees
Futures fees are charged on position value on both open and close. High leverage plus frequent trading adds up fast — see the Binance fees and OKX fees guides.
Take-profit and stop-loss
- Stop-loss closes the position at a set price to cap the loss.
- Take-profit closes at your target to lock in gains.
- Keep the stop well away from the liquidation price, or you'll be liquidated first. The position size calculator sizes a trade from the maximum you're willing to lose, and the P&L calculator shows returns.
First-trade checklist
- USDT-M contract, isolated margin.
- Start at 2–3× leverage, not 20×.
- Work out the liquidation price and stop before you place the order.
- Check the current funding rate; avoid holding the expensive side for long.
- Only use money you can afford to lose entirely.
FAQ
Can I lose more than my margin?
In isolated mode you lose at most that position's margin; in cross mode, potentially your whole available balance. In extreme moves the exchange's insurance fund and auto-deleveraging cover deficits, so regular users don't end up owing money.
Can I hold a perpetual indefinitely?
Yes — there's no expiry — but you keep paying or receiving funding and carry liquidation risk.
How do Binance and OKX futures differ?
The core rules are the same; the differences are funding rates, margin tiers and how fast new tokens get contracts. See Binance vs OKX.