Crypto Futures Trading Guide: Leverage, Liquidation and Fees

In spot trading you buy the asset itself. A futures contract is an agreement based on the asset's price, so you can take a position on where it is heading without owning it.

Perpetual swaps vs delivery futures

Traditional futures expire. Most crypto futures are perpetual swaps (perps) that never do: you can hold a position as long as you keep enough collateral in the account to maintain it.

The funding rate

Because a perpetual has no expiry, the exchange needs a mechanism that keeps its price close to the spot price. That mechanism is the funding rate, a periodic payment between traders:

• If most traders are long, longs pay shorts.
• If most traders are short, shorts pay longs.
• The interval and the rate depend on the exchange and the contract, so check them before you open a position.

Leverage lets you control a large position with a small amount of capital, and it multiplies profits and losses equally. With $1,000 of your own money:

• At 1x you control a $1,000 position.
• At 10x you control a $10,000 position.
• At 50x you control a $50,000 position.

At 10x, a 10% move in your favor roughly doubles your margin, and a 10% move against you wipes it out. When the loss reaches the point where your margin can no longer cover it, the exchange closes the position automatically. That is liquidation, and it happens before the full 10% in practice because of fees and maintenance margin. The higher the leverage, the smaller the adverse move that liquidates you.

Our leverage and risk management guide covers position sizing and stop-losses in more depth.

Stop-loss and take-profit

Never open a futures position without an exit plan. A stop-loss closes the trade at a price you choose if the market goes the wrong way; a take-profit locks in gains at a level you set. Stops can fill at a worse price in a fast market, so they limit risk without removing it.

Isolated vs cross margin

• Cross margin: your whole futures balance backs the position, so one bad trade can drain the account.
• Isolated margin: you assign a fixed amount to one position. If it is liquidated, only that amount is lost. Beginners usually start here.

Risk a small share per trade

A common rule of thumb is to risk only a small fraction of the account on any single trade, so that a string of losses does not end your trading. How small is a personal decision; the point is to choose the number before you open the position, not after.

Futures fees are charged on the position size (the leveraged amount), not on the margin you put in. A rate that looks tiny becomes large relative to your own capital.

Repeat that a few times a month and fees alone can consume a large part of a small account, even if your trades break even. That is why active futures traders compare fee schedules carefully, prefer maker (limit) orders where the strategy allows, and keep leverage low.

• Compare schedules: futures fees and leverage limits differ by exchange and contract. See our exchange fee comparison.
• Referral discounts: some exchanges give referred users a fee discount or promotion. If an exchange offers one, the exchange sets it and can change it; check your account's fee page after you register.
• Order type: maker orders are usually cheaper than taker orders on the same exchange.