Understand perpetuals trading

Perpetual futures (or "perps") are a type of derivative instrument that lets traders speculate on the price of an asset, such as a crypto asset — for instance,Bitcoin or Ethereum — without owning the underlying asset. Unlike traditional futures, perpetual futures have no expiration date, so positions can be held indefinitely as long as margin requirements and periodic funding rate payments are met.

How are crypto perpetuals different from traditional futures?

Traditional futures expire on a set date and have no funding rate mechanism. Crypto perpetuals never expire, and therefore use periodic interest payments based on a “funding rate”  to keep prices aligned with the spot market. Crypto perpetuals also typically offer higher leverage, and trade 24/7.

What does "going long" or "going short" mean?

• Long: you profit if the asset price rises.

• Short: you profit if the asset price falls.

Perpetuals let traders take either side of the marketThey're widely used for both directional trading and hedging.

Perpetual futures are designed to mirror the spot price of an asset, without the need to own it. To keep the perp price aligned with spot, perpetuals use a funding rate mechanism — a small periodic payment exchanged directly between long and short traders, typically at regular intervals during a day.

What is the funding rate?

• Positive funding rate: perp price trades above spot → longs pay shorts.

• Negative funding rate: perp price trades below spot → shorts pay longs.

The funding rate fluctuates with market demand and acts a self-correcting mechanism: it incentivises traders to take the opposite side of the dominant trend, pushing the perp price back toward the spot price.

Can you give a quick example?

Imagine Alice opens a long BTC perpetual with 10x leverage and $1,000 in margin (i.e. $10,000 of Bitcoin exposure):

• If BTC rises 5%, Alice earns 50% on her margin (+$500). However, since the perp price tends to trade above spot in a rising market, the funding rate is positive — Alice pays the funding rate to short sellers periodically.

• If BTC falls 5%, Alice loses 50% (-$500). However, since the perp price tends to trade below spot in a falling market, the funding rate is negative — Alice receives funding rate payments from short sellers periodically.

Key takeaway: longs pay when the market rises, shorts pay when the market falls.

Yes. Coinbase offers perpetual futures via Coinbase Advanced, available to eligible retail traders in non‑US jurisdictions. Perpetuals on Coinbase are offered by Coinbase Bermuda Limited (CBBM), a regulated entity, giving traders access to a deep order book and professional‑grade tooling on a compliance‑first exchange.

What can I do on Coinbase Advanced?

• Open and close perpetuals orders in real time

• Use professional charting tools and technical indicators

• Trade with leverage from 1x to 50x (subject to eligibility and jurisdiction)

• Monitor margin, funding rates and open positions in one dashboard
  
  

What perpetual markets are available?
Coinbase Advanced supports perpetuals on major crypto assets, including BTC perps and ETH perps. For the current list of supported markets, see the Coinbase Help Center.

To begin trading Coinbase perpetuals you'll need an eligible Coinbase account, identity verification, and funds deposited to meet margin requirements. Once eligible, open Coinbase Advanced, select a perpetual market, choose your leverage, and place your order.

Am I eligible?

Perpetuals are available to retail traders in eligible non‑US jurisdictions who meet account and verification requirements. Eligibility depends on your country of residence and local regulation — check the Help Center for the current supported‑regions list.

How do I fund my account?

Deposit funds into your Coinbase account to satisfy the initial margin needed to open a position, or to top up maintenance margin on an existing position. Supported deposit methods vary by region — see the Deposit Funds Help Center article for a full walkthrough.

Is there a minimum balance?

There's no fixed minimum, but every position needs enough initial margin to open and enough maintenance margin to stay open.

Margin is the collateral you post to open and maintain a leveraged perpetual position. Leverage lets you control a larger position with a smaller amount of capital — but it amplifies both profits and losses.

What's the difference between initial and maintenance margin?

• Initial margin: the collateral required to open a new position.

• Maintenance margin: the minimum balance required to keep a position open. If your account falls below it, your position is automatically liquidated - you lose your initial margin.

How much leverage can I use on Coinbase?

Coinbase Advanced supports leverage from 1x up to 50x, subject to eligibility, the specific contract, and local jurisdictional limits.

How does leverage actually change my P&L?

Leverage has a direct impact on your P&L. The higher the leverage, the smaller the adverse price move needed to trigger a liquidation. See below a few examples: 

The funding rate is a small periodic payment exchanged directly between long and short traders to keep the perpetual price aligned with the spot price. It is not a fee paid to the exchange — it flows peer‑to‑peer between traders.

When do longs pay shorts (and vice versa)?

• Positive funding rate: longs pay shorts (perp price above spot).

• Negative funding rate: shorts pay longs (perp price below spot).

How often are funding payments settled?

Funding payments occur at fixed intervals throughout the day and are calculated from the difference between the perpetual contract price and the underlying spot index. The exact interval and methodology depend on the contract — see the Coinbase Help Center for each market's schedule.

Why does it matter for my strategy?

Funding fees accumulate over time and can meaningfully impact profitability, particularly on: 

• long‑duration positions - payments compound over many intervals ; and / or

• high‑leverage positions: the payment is calculated on the full notional exposure, not just your margin.

Funding payments should therefore be factored into any perpetuals trading strategy.

Liquidation happens when your account balance falls below the maintenance margin required for an open position. To prevent further losses, the exchange will automatically close (fully or partially) the position. With high leverage, even small adverse price moves can trigger liquidation — for example, a 5% drop on a 20x leveraged trade can wipe out the entire margin.

How can I reduce liquidation risk?

• Use lower leverage

• Monitor your margin level regularly

• Add collateral proactively when your buffer thins

• Use stop‑loss orders to exit losing trades early

• Avoid over‑allocating capital to a single leveraged position

• Factor in funding payments, which reduce your margin over time
  
  

What happens during a liquidation on Coinbase?
If your margin falls below the maintenance threshold, Coinbase Advanced will trigger an automatic (and potentially partial) liquidation to protect against further losses. See the Liquidation Management article in the Coinbase Help Center for a full overview.

Perpetuals combine three features that suit crypto markets particularly well: no expiration date, leverage, and 24/7 access — giving traders flexibility, capital efficiency and the ability to express both bullish and bearish views.

What are the main benefits?

• Flexibility: no expiry, no contract rollovers

• Leverage: amplify exposure with less capital

• Hedging: offset spot holdings with a short perp position

• 24/7 access: trade around the clock, including weekends
  
  

What risks should I consider?

• Liquidation risk: leverage can wipe out your entire margin

• Funding‑rate costs: can accumulate on long‑held positions

• Volatility: crypto markets move fast in both directions

• Amplified losses: leverage magnifies downside as much as upside

Only trade with capital you can afford to lose, and use risk‑management tools such as stop‑loss orders and conservative leverage.

Trading perpetual futures on Coinbase Advanced involves two main cost components:

Trading fees

Maker and taker fees are charged per trade. Rates vary by product and account tier — see the Coinbase fees page for the schedule that applies to you.

Funding‑rate payments

Periodic payments exchanged between longs and shorts to keep the perp price aligned with spot. These are not paid to Coinbase — they flow between traders.

Are there other costs?

• Slippage on large orders in fast‑moving markets

• Liquidation costs if a position is forcibly closed

Tax implications, which vary by jurisdiction — Coinbase does not provide tax advice, so please consult a qualified tax adviser in your country of residence.

Yes. Coinbase partners with high‑bar regulators around the world to build a robust framework focused on user protections. Perpetual futures on Coinbase are offered by Coinbase Bermuda Limited (CBBM), and the contracts are built within rigorous compliance standards.

How are my funds protected?

Margin posted for perpetuals trading is held within the regulated infrastructure of the relevant Coinbase entity, with institutional‑grade custody, segregation and security controls. See the Coinbase Help Center and product disclosures for the specific arrangements that apply to your account.

What security features does Coinbase provide?

• Two‑factor authentication (2FA)

• Device verification and address allow‑listing

• Real‑time risk monitoring

• Enterprise‑grade infrastructure used across both spot and perpetuals

Where can I get more help?
The Coinbase Help Center covers getting started, depositing funds, managing margin and handling liquidations. You can also explore the Coinbase Learn hub for deeper articles on perpetuals, funding rates, and liquidation strategies.