# How Perpetual Futures Work ### What Are Perpetual Futures? Perpetual futures (“perps”) are leveraged trading contracts with no expiration date.\ Unlike traditional futures, they roll over forever and mimic spot prices through a mechanism called funding rate. Perps allow you to: * Long (profit if price goes up) * Short (profit if price goes down) * Use leverage * Hedge exposure * Trade with lower capital requirements ### Why Perpetuals Don’t Expire Traditional futures have settlement dates (monthly, quarterly).\ Perps avoid this by using: * Continuous price alignment * Funding payments between long and short traders This keeps perp prices close to the underlying spot price. ### What Is Funding Rate? Funding is a periodic payment between traders: * If funding is **positive**, longs pay shorts * If funding is **negative**, shorts pay longs Funding exists to keep perp prices anchored to spot prices. ### Leverage and Liquidations Leverage amplifies both gains and losses.\ Higher leverage = higher liquidation risk. Liquidation occurs when your margin is too small to cover unrealized losses.\ Platforms automatically close your position to prevent negative balances. ### Why Perps Are Popular * No expiration * Ability to short * Flexible leverage * Efficient hedging * High liquidity * Lower capital requirements --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://supercexy.gitbook.io/supercexy-docs/knowledge-base/how-perpetual-futures-work.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.