Learn / Risk & Position Sizing
Perpetuals vs dated futures
A dated future expires, and convergence to spot is guaranteed by the contract. A perpetual never expires, so convergence has to be manufactured — which is what funding does. Everything else follows from that.
Short answer
- Holding a directional view for days or weeks → perpetual, usually. Liquidity is deeper and there is no roll. Budget the funding.
- Holding across a period of extreme funding → a dated future, where the cost is fixed at entry rather than accruing at an unknown rate.
- You need a known cost of carry → dated future. The basis is set when you trade.
- Short-term trading → perpetual. Funding is negligible intraday.
The convergence problem
A dated future must equal spot at expiry, because it settles against it. Arbitrage enforces the path: too expensive and you sell the future and buy spot, collecting the difference at settlement.
A perpetual has no settlement date, so nothing forces it toward spot. Left alone, it would drift wherever positioning pushed it.
Funding is the substitute. When the perpetual trades above spot, the funding rate is positive and longs pay shorts, which makes being long costly and pushes the price back down. Below spot, it reverses. See the funding rate calculator.
How the cost behaves
This is the practical difference.
Dated future — cost is in the basis, fixed at entry. You buy at a premium or discount to spot, and that difference decays to zero by expiry. You know the cost of the whole holding period when you enter.
Perpetual — cost accrues, at a rate you do not know in advance. Funding is recalculated every interval and responds to positioning. A position held for a month pays whatever the rate does over that month.
| Dated future | Perpetual | |
|---|---|---|
| Expiry | Yes | No |
| Convergence | By contract | Via funding |
| Cost of carry | Fixed at entry, in the basis | Accrues at a variable rate |
| Known in advance | Yes | No |
| Requires rolling | Yes | No |
| Typical liquidity (crypto) | Lower | Higher |
The roll
Holding a dated position past expiry means closing one contract and opening the next. That costs two rounds of fees plus the spread between contracts, and it has to be done on schedule.
Perpetuals avoid it entirely, which is most of why they dominate crypto volume. The trade is a known, periodic cost against an unknown, continuous one.
What funding does to your position
Two things people underestimate.
It is charged on notional, not margin. At 10× leverage the funding cost relative to the margin you posted is ten times the headline rate. A rate that looks negligible against position value is not negligible against collateral.
It moves your liquidation price. Funding you pay comes out of margin, so a position held through many settlements is progressively less collateralised and liquidation creeps toward entry. No liquidation calculator models this, including ours, which is one reason to treat the computed level as a best case — see what is maintenance margin.
Receiving funding is not free money
A persistently negative rate means shorts are paid to hold, which looks like income.
It is income conditional on carrying directional risk in a market whose positioning is already one-sided — and the rate that pays you is a symptom of that one-sidedness, which can resolve quickly and in the direction that costs more than the funding earned.
The arithmetic tells you the size of the carry. It says nothing about whether holding the position is a good idea, and the two get confused constantly.
Basis as information
The gap between a future and spot is readable.
A large premium on dated futures, or persistently positive funding on perpetuals, both indicate crowded long positioning. That is not a trade signal — crowded can stay crowded — but it is information about what happens if the market moves against that crowd, which connects to liquidation cascades.
Operationally
Symbol conventions differ, and dated contracts encode expiry in the symbol. Code that assumes a static symbol breaks at every roll.
Contract specifications differ — tick size, contract multiplier, minimum size. See symbol filters and minimum order sizes.
Maintenance margin tiers differ between the two, so the same notional can have a different liquidation price depending on which you are trading.
FAQ
What is the difference between a perpetual and a futures contract?
A dated future has an expiry and settles against spot, so convergence is guaranteed by the contract and the cost of carry is fixed in the basis at entry. A perpetual never expires, so it uses periodic funding payments between longs and shorts to stay near spot — meaning the holding cost accrues at a rate you do not know in advance.
Should I trade perpetuals or dated futures?
Perpetuals for most purposes, given deeper liquidity and no rolling. Dated futures when you want the cost of holding fixed at entry rather than accruing — which matters if you expect to hold through a period of extreme funding, since that cost is unbounded in advance.
Does funding affect my liquidation price?
Yes, when you are paying it. Funding is deducted from margin, so a position held across many settlements has less collateral backing it than at entry and liquidation moves closer. Calculators do not model this, which is one reason to treat a computed liquidation price as optimistic.
Is a high funding rate a signal?
It indicates crowded positioning, which is information rather than a signal — crowded conditions can persist far longer than a position can. What it tells you is what happens if the market moves against that crowd, which is the mechanism behind cascading liquidations.