> For the complete documentation index, see [llms.txt](https://vexar.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://vexar.gitbook.io/docs/trading-guide/perpetual-trading.md). # Perpetual Trading ### What are Perpetual Contracts? Perpetual contracts (also called perpetual futures or perps) are derivative products that allow you to speculate on the price of an asset with leverage, without an expiry date. Unlike traditional futures contracts, perpetuals never settle and can be held indefinitely. #### Key Differences from Traditional Futures | Feature | Perpetual Contracts | Traditional Futures | | ------------------- | ---------------------- | ------------------------- | | **Expiration** | Never expires | Fixed expiration date | | **Settlement** | Continuous via funding | Settles at expiry | | **Price Anchoring** | Funding rate mechanism | Convergence at expiry | | **Holding Period** | Indefinite | Limited by expiry | | **Rollover** | Not needed | Must roll to new contract | ### How Perpetuals Work on VEXAR #### Contract Specifications **Available Markets:** * 100+ trading pairs * Major cryptocurrencies: BTC, ETH, SOL, MATIC, AVAX, etc. * DeFi tokens, memecoins, and altcoins **Leverage:** * Up to 20x leverage * Adjustable per position * Isolated or cross margin modes **Minimum Order:** * $10 USD equivalent * Precision varies by market ### Core Concepts #### 1. Leverage **What is Leverage?** Leverage allows you to control a larger position with less capital. **Example:** ``` With 10x leverage and $1,000: - Position Size: $10,000 - Required Margin: $1,000 - Collateral: $1,000 If BTC moves +5%: - Position gains $500 (50% ROI) If BTC moves -5%: - Position loses $500 (-50% loss) ``` **Leverage Tiers on VEXAR:** | Position Value | Max Leverage | Maintenance Margin | | -------------- | ------------ | ------------------ | | $0 - $50K | 20x | 2.5% | | $50K - $250K | 10x | 5% | | $250K - $1M | 5x | 10% | | $1M+ | 3x | 15% | #### 2. Margin Modes **Cross Margin** * Uses your entire account balance as collateral * Positions share the same margin pool * Lower liquidation risk across all positions * One position's profit can offset another's loss **When to use:** * Multiple positions in the same direction * When you want maximum flexibility * For experienced traders managing portfolio risk **Isolated Margin** * Each position has separate collateral * Loss limited to position's margin * Cannot affect other positions * More predictable risk **When to use:** * High-risk positions * When you want to limit exposure * Testing new strategies * Recommended for beginners #### 3. Funding Rate **What is it?** A mechanism to keep perpetual prices close to spot prices. Paid every 8 hours between traders. **How it works:** ``` Positive Funding Rate (+0.01%): - Perpetual price > Spot price - Longs pay shorts - Incentivizes shorts, discourages longs Negative Funding Rate (-0.01%): - Perpetual price < Spot price - Shorts pay longs - Incentivizes longs, discourages shorts ``` **Funding Schedule:** * Paid every 8 hours: 00:00, 08:00, 16:00 UTC * Based on average premium over 8-hour period * Automatically deducted/credited to your account **Trading Strategy:** * Check funding rate before opening positions * Long-term holds: Consider funding costs * Arbitrage: Profit from extreme funding rates #### 4. Liquidation **What is Liquidation?** When your position is automatically closed because losses exceed your margin. **Liquidation Price Calculation:** ``` Long Position: Liquidation = Entry Price × (1 - 1/Leverage + Maintenance Margin %) Short Position: Liquidation = Entry Price × (1 + 1/Leverage - Maintenance Margin %) ``` **Example:** ``` Long BTC at $40,000 Leverage: 10x Maintenance Margin: 2.5% Liquidation Price: $40,000 × (1 - 0.1 + 0.025) = $37,000 Price can drop 7.5% before liquidation ``` **Liquidation Process:** 1. Position enters liquidation when mark price reaches liquidation price 2. Position is taken over by the liquidation engine 3. Position is closed at bankruptcy price 4. Any remaining margin goes to insurance fund **How to Avoid Liquidation:** * Use lower leverage * Add more margin to your position * Set stop-loss orders well before liquidation price * Monitor positions regularly * Don't overtrade or use excessive leverage #### 5. Mark Price **What is Mark Price?** The fair value price used to calculate PnL and liquidation, based on spot index prices. **Why not use last price?** * Last price can be manipulated * Flash crashes shouldn't trigger liquidations * Mark price is more stable and fair **Calculation:** ``` Mark Price = Spot Index Price × (1 + Funding Basis) Spot Index = Average price from multiple exchanges (Binance, Coinbase, Kraken, etc.) ``` ### Opening and Managing Positions #### Opening a Position **Step-by-Step:** 1. **Select Market** * Choose trading pair (e.g., BTCUSDT) * Check 24h volume and funding rate 2. **Choose Direction** * **Long**: Profit when price goes up * **Short**: Profit when price goes down 3. **Select Order Type** * Market: Instant execution * Limit: Execute at specific price * Stop: Trigger at specified price 4. **Set Leverage** * Adjust slider (1x - 20x) * Higher leverage = higher risk 5. **Enter Position Size** * In base currency (BTC) or quote currency (USDT) * Check required margin 6. **Set Risk Management** * Stop-loss (recommended) * Take-profit (optional) * Trailing stop (advanced) 7. **Review and Confirm** * Entry price * Position size * Leverage * Liquidation price * Estimated PnL #### Managing Open Positions **Position Panel Information:** ``` BTCUSDT Long 10x ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Size: 0.5 BTC ($21,000) Entry: $42,000 Mark: $42,500 (+1.19%) Liq. Price: $37,800 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Unrealized PnL: +$250 (+11.9%) Realized PnL: $0 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Funding: -$2.50 (next in 3h 45m) ``` **Actions Available:** * **Add to Position**: Increase size * **Close Position**: Exit fully * **Close Partial**: Exit portion * **Add Margin**: Reduce liquidation risk * **Adjust Leverage**: Change leverage * **Set TP/SL**: Add risk management #### Closing a Position **Method 1: Market Close** * Instant execution at current price * May have slight slippage * Best for: Quick exits, stop-outs **Method 2: Limit Close** * Close at specific price * No slippage but not guaranteed * Best for: Taking profits at target **Method 3: Stop-Loss Close** * Automatic close when price hits level * Essential risk management tool * Best for: Limiting losses ### Advanced Strategies #### 1. Delta-Neutral Hedging **Strategy:** * Hold spot position * Open opposite perpetual position * Capture funding rate profits * Eliminate price risk **Example:** ``` Hold: 1 BTC (spot) at $40,000 Short: 1 BTC (perp) at $40,000 with 1x Funding Rate: +0.03% every 8 hours Daily Funding: +0.09% = $36/day Price Risk: Zero (hedged) Profit: Funding payments ``` #### 2. Breakout Trading **Strategy:** * Identify key support/resistance * Enter when price breaks level * Use stop-loss just below/above breakout **Setup:** ``` Resistance: $42,000 Entry: $42,100 (breakout confirmed) Stop-Loss: $41,800 (-0.7%) Take-Profit: $43,500 (+3.3%) Risk:Reward = 1:4.7 ``` #### 3. Mean Reversion **Strategy:** * Identify overbought/oversold conditions * Enter counter-trend positions * Quick profits on reversion to mean **Indicators:** * RSI < 30 (oversold) → Long * RSI > 70 (overbought) → Short * Bollinger Bands extremes #### 4. Trend Following **Strategy:** * Identify strong trends * Enter on pullbacks * Ride trend until reversal signal **Entry Rules:** ``` Uptrend: - Price above 50 EMA - MACD bullish - Enter on pullback to 20 EMA - Stop below swing low Downtrend: - Price below 50 EMA - MACD bearish - Enter on pullback to 20 EMA - Stop above swing high ``` ### Risk Management for Perpetuals #### Position Sizing Formula ``` Position Size = (Account Balance × Risk %) / (Stop Loss % × Leverage) Example: Account: $10,000 Risk: 2% = $200 Stop Loss: 3% from entry Leverage: 10x Position = ($10,000 × 0.02) / (0.03 × 10) = $200 / 0.3 = $666.67 worth of contracts ``` #### Leverage Decision Matrix | Account Experience | Max Leverage | Typical Position Size | | ------------------ | ------------ | --------------------- | | Beginner | 2-3x | 5-10% of capital | | Intermediate | 3-5x | 10-20% of capital | | Advanced | 5-10x | 20-30% of capital | | Expert | 10-20x | 30-50% of capital | #### Stop-Loss Placement **1. Percentage-Based** ``` Entry: $40,000 Stop: 2% = $39,200 Leverage: 10x Max Loss: 20% of margin ``` **2. Technical-Based** ``` Long Entry: $40,000 Support: $39,500 Stop: $39,450 (below support) Buffer: $50 to avoid noise ``` **3. ATR-Based** ``` Entry: $40,000 ATR (14): $800 Stop: Entry - (2 × ATR) = $40,000 - $1,600 = $38,400 ``` ### Common Mistakes to Avoid #### 1. Over-Leveraging ❌ **Wrong:** ``` Account: $1,000 Position: 20x leverage on full account One 5% move = total liquidation ``` ✅ **Right:** ``` Account: $1,000 Position: 5x leverage on 20% ($200) Allows 20% adverse move before liquidation ``` #### 2. Ignoring Funding Rates ❌ **Wrong:** * Hold position for weeks without checking funding * Pay 0.01% × 3 times per day = 0.03% daily * 10 days = 0.3% loss just from funding ✅ **Right:** * Check funding rate before entering * Factor into trade profitability * Close and reopen if funding is expensive #### 3. No Stop-Loss ❌ **Wrong:** ``` Entry: $40,000 No stop-loss Price drops to $36,000 Liquidated with total loss ``` ✅ **Right:** ``` Entry: $40,000 Stop-Loss: $39,200 (2% risk) Price drops to $39,200 Position closed with controlled loss ``` #### 4. Revenge Trading ❌ **Wrong:** * Lose $500 * Immediately open larger position to recover * Use higher leverage "to make it back faster" * Often leads to bigger losses ✅ **Right:** * Accept the loss * Review what went wrong * Wait for next good setup * Stick to position sizing rules ### Performance Tracking #### Key Metrics to Monitor **1. Realized PnL** * Total profits/losses from closed positions * Most important metric **2. Win Rate** ``` Win Rate = Winning Trades / Total Trades Example: 30 trades, 18 winners = 18/30 = 60% win rate ``` **3. Profit Factor** ``` Profit Factor = Total Profits / Total Losses Example: Profits: $5,000 Losses: $2,500 = 5000/2500 = 2.0 (Above 1.5 is good, above 2.0 is excellent) ``` **4. Average Win vs Average Loss** ``` Ideal Ratio: 2:1 or higher Example: Average Win: $200 Average Loss: $100 = 2:1 ratio ``` **5. Maximum Drawdown** ``` Largest peak-to-trough decline Account Peak: $12,000 Account Low: $9,000 Drawdown: -25% ``` ### Resources and Tools #### Trading Tools * **TradingView**: Advanced charting * **Position Calculator**: Calculate liquidation prices * **Funding Rate History**: Analyze historical rates * **API**: Automated trading #### Learning Resources * Trading Guide: General trading concepts * API Documentation: Automated trading * Security: Protect your account * FAQ: Common questions ### Conclusion Perpetual contracts offer powerful trading opportunities but require careful risk management. Key takeaways: ✅ Start with low leverage (2-5x) ✅ Always use stop-losses ✅ Monitor funding rates ✅ Calculate position sizes properly ✅ Track your performance ✅ Learn from mistakes ✅ Never risk more than you can afford to lose *** *Next: Spot Trading →* --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## 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, and the optional `goal` query parameter: ``` GET https://vexar.gitbook.io/docs/trading-guide/perpetual-trading.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. 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.