How perpetual futures differ from regular futures
Traditional futures expire on a fixed date. A quarterly BTC future, for example, settles or rolls at expiry. A perpetual future does not expire, so exchanges use funding payments to pull the perp price back toward spot.
When the perp trades above spot, longs usually pay shorts. When it trades below spot, shorts usually pay longs. The exact formula varies by venue, but the purpose is the same: keep the perpetual contract anchored.
Why perps matter for strategy research
Perpetual futures create market data that spot markets do not have:
- Funding shows which side is paying to stay in the trade.
- Open interest shows whether leverage is building or leaving.
- Liquidations show where forced exits happened.
- Basis between spot and perp can reveal crowded positioning.
These signals make perps useful for strategy backtests. A rule can ask whether price, funding, and positioning confirm each other before it fires.
Risks and considerations
Perps make leverage easy, which means bad rules can fail quickly. Funding can turn a profitable directional view into a losing hold, slippage can widen during stress, and liquidations can cascade when many traders share the same position.
Before automating a perp strategy, backtest the trigger, inspect failed periods, and start with alerts or preview-confirmed execution.