Understanding perpetual contracts is essential for anyone diving into the world of cryptocurrency derivatives trading. Among the most popular instruments are USD-M Perpetual Contracts, which allow traders to speculate on price movements without owning the underlying asset. This guide walks you through everything you need to know—from setup and funding to executing trades with confidence.
Whether you're new to futures or refining your strategy, this comprehensive walkthrough ensures you grasp the mechanics behind perpetual contracts, margin trading, position management, and risk control.
What Are USD-M Perpetual Contracts?
A USD-M Perpetual Contract is a type of futures contract denominated in US dollars (or stablecoins like USDT) rather than in the cryptocurrency itself (such as BTC or ETH). Unlike traditional futures, these contracts have no expiry date, allowing traders to hold positions indefinitely—hence the term "perpetual."
These contracts track the price of the underlying crypto asset and enable both long (buy) and short (sell) positions. Traders use them for hedging, speculation, or leveraging their capital for greater exposure.
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How to Get Started with Perpetual Contracts
Before placing your first trade, ensure your account supports derivatives trading. Most major platforms require identity verification and acceptance of risk disclosures.
Step 1: Account Setup and Verification
Complete KYC (Know Your Customer) procedures on your chosen exchange. This typically involves submitting identification documents and verifying your phone number or email.
Step 2: Navigate to the Derivatives Section
Once verified, access the “Futures” or “Derivatives” section of the platform. Look for USD-M Perpetual Contracts specifically.
Step 3: Choose a Trading Pair
Popular pairs include BTC/USDT, ETH/USDT, and SOL/USDT. Select one based on your market outlook and risk tolerance.
Funding Your Perpetual Contract Account
To trade perpetual contracts, you must deposit margin—collateral used to open and maintain positions.
Supported Assets
Most platforms accept USDT, BUSD, FDUSD, or other stablecoins as margin. Some also allow cryptocurrencies like BTC or ETH as collateral.
Deposit Process
- Go to the wallet or funding section.
- Select “Derivatives Wallet” or “Futures Wallet.”
- Transfer funds from your spot account or deposit directly via blockchain.
Always double-check network compatibility when depositing via blockchain to avoid asset loss.
Withdrawing Funds
You can transfer unused margin back to your spot wallet at any time, provided you're not in an active position or under liquidation risk.
Opening and Closing Positions
Now that your account is funded, it's time to trade.
Placing an Order
You’ll encounter several order types:
- Limit Order: Execute at a specified price.
- Market Order: Execute immediately at current market price.
- Stop-Limit / Stop-Market: Triggered when price reaches a certain level—useful for managing downside risk.
Going Long vs. Short
- Long: Bet that the price will rise. Profit if the market moves upward.
- Short: Bet that the price will fall. Profit if the market declines.
Leverage Settings
Leverage amplifies both gains and losses. Common options range from 2x to 125x. Beginners should start with lower leverage (e.g., 5x–10x) to manage risk effectively.
Closing a Position
To exit:
- Click “Close Position” or place an opposing trade (e.g., sell to close a long).
- Partial closes are allowed—you don’t have to close the entire position at once.
Understanding Key Concepts
Mark Price vs. Last Price
The mark price is used to calculate unrealized P&L and prevent manipulation. It’s derived from the average price across major spot exchanges. The last traded price reflects actual transactions on the platform.
Funding Rate
Since perpetual contracts don’t expire, a funding rate mechanism aligns their price with the spot market. Every 8 hours, traders pay or receive funding depending on whether the contract trades above or below index price.
- Longs pay shorts when rate is positive.
- Shorts pay longs when rate is negative.
This encourages balanced market participation.
Liquidation and Risk Management
If your margin falls below maintenance levels due to adverse price movement, your position may be liquidated—automatically closed to prevent further losses.
Use stop-loss orders and monitor margin ratio closely. Adjust leverage based on volatility.
Frequently Asked Questions (FAQ)
Q: What is the difference between USD-M and COIN-M perpetual contracts?
A: USD-M contracts are settled in stablecoins (like USDT), while COIN-M contracts use cryptocurrency (like BTC) as collateral and settlement asset. USD-M is ideal for traders who want consistent margin value unaffected by crypto volatility.
Q: Can I trade perpetual contracts without leverage?
A: Yes. You can set leverage to 1x, effectively trading with your full margin as collateral—similar to spot trading but with directional exposure.
Q: When does funding occur?
A: Typically every 8 hours—at 00:00 UTC, 08:00 UTC, and 16:00 UTC. Check your platform’s schedule.
Q: How is profit calculated in USD-M contracts?
A: Profit = (Exit Price – Entry Price) × Position Size. For longs; reverse for shorts. Payout is in stablecoin.
Q: Is there a holding period limit?
A: No. You can hold positions indefinitely as long as you meet margin requirements and pay/receive funding fees.
Advanced Tips for Better Trading Performance
- Use Take-Profit and Stop-Loss Orders: Automate exits to lock in gains and minimize losses.
- Monitor Open Interest: Rising open interest suggests increasing market participation—often precedes strong trends.
- Track Funding Rates: Extremely high positive rates may signal over-leveraged longs, increasing risk of a correction.
- Avoid Over-Leveraging During News Events: High volatility increases liquidation risk.
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Staying Secure and Informed
Always access your trading platform through official channels. Beware of phishing sites and fake customer service accounts.
Join official communities for updates:
- Follow official announcements on platform blogs.
- Subscribe to verified social media channels.
- Participate in educational webinars or courses.
Avoid sharing private keys or enabling unauthorized API connections.
Final Thoughts
Mastering USD-M perpetual contracts opens doors to dynamic trading opportunities in the crypto markets. With proper risk management, strategic planning, and continuous learning, you can navigate this powerful financial instrument with growing confidence.
Remember: knowledge reduces risk. Start small, test strategies in demo mode if available, and scale up as experience builds.
👉 Begin your journey into perpetual contract trading with a trusted global platform.
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