What Are Perpetual Futures?
How perps work, what funding rates are, and why prop firms use them.
Last updated 19 Oct 2026Most crypto prop firms fund traders on perpetual futures, not on spot coins or dated futures contracts. Perps behave differently from both: they never expire, they charge or pay funding every few hours, and they let you pick your own leverage. Here is how they work, what changes on a simulated prop account, and what to check before you buy a crypto evaluation.
Futures with no expiry
A perpetual future is a derivative that tracks an asset like BTC without ever expiring. Instead of rolling contracts, a funding payment between longs and shorts every few hours keeps the price near spot.
A classic futures contract has a settlement date. The December contract and the March contract are different instruments, and anyone who wants to keep a position has to close one and open the next. Perpetual contracts remove the date. You can hold a long or a short for an hour or for a year on the same contract, as long as your margin holds and you pay or receive funding along the way.
How the price stays close to spot
Exchanges track two prices. The index price is an average of the asset’s spot price on several large exchanges. The mark price is a smoothed version of the contract’s own price, used to value open positions and decide liquidations, so that one sharp spike on a thin order book doesn’t wipe out accounts. When the perpetual drifts away from the index, funding pulls it back.
Funding rates
When perps trade above spot, longs pay shorts; below spot, shorts pay longs. On a prop account, funding is usually simulated and shows up in your P&L.
A funding rate example
Say funding is +0.01% every 8 hours and you hold a $10,000 BTC long. Longs pay shorts, so you pay $1 at each funding time, $3 a day. Short the same size and you receive it instead. Rates change every period and turn negative when shorts are crowded.
Small rates add up on big positions. At the same +0.01%, a $100,000 position held for a week pays $210 in funding, and in a strong bull market rates several times higher are common. For a day trader who is flat before each funding time it costs nothing; for a swing trader on a prop account it can be the difference between a winning and a losing week. Check whether the firm charges funding on its simulated accounts and at what times.
Leverage, margin and liquidation
On an exchange, leverage sets how much margin a position needs. At 1:10, a $10,000 position needs $1,000 of margin, and a move of roughly 10% against you, minus fees, uses all of it and triggers liquidation. At 1:50 the same position needs $200 and is liquidated by a move of about 2%. Leverage doesn’t make a trade more profitable; it only decides how much of your account a given move can take.
Leverage and prop loss limits
On an exchange, leverage decides how close your liquidation price sits. On a prop account the daily and max loss limits come first: with a 5% daily loss on 25K you can lose $1,250 in a day, whatever the leverage. Higher leverage only lets you reach that limit with a smaller move.
Run the numbers before you size a trade. On a 25K account with 1:20 leverage you could open a $500,000 BTC position. A 0.25% move against it loses $1,250 and ends your day. With 1:5 leverage the largest position is $125,000, and the same $1,250 loss needs a 1% move. Most traders who fail crypto evals don’t fail on liquidation; they fail on the daily loss limit, reached with a position far bigger than the account could carry.
What changes on a prop account
- Prices come from a real exchange feed, but your orders don’t reach the market, so fills are simulated, usually at the best bid or offer with a modelled spread.
- Trading fees and funding are simulated too, at rates the firm sets. Read them: they come off your profit.
- The daily loss resets at a fixed time, usually 00:00 UTC, not at a session close. A position open across the reset counts towards both days.
- Weekend moves count. There is no Friday close to flatten before, so a gap risk rule may apply instead.
Perps vs regulated crypto futures
Regulated exchanges such as CME list bitcoin and ether futures with monthly expiries, standard contract sizes and the exchange’s trading schedule. Futures prop firms that offer crypto do it through those contracts, on the same platforms as NQ or ES. Crypto perps firms instead copy the perpetual contracts of the big crypto exchanges. If you trade crypto on NinjaTrader or Tradovate, look at futures firms; if you trade perps on an exchange-style platform, look at crypto perps firms.
Why prop firms offer them
Perps trade 24/7 with deep liquidity and adjustable leverage, which makes them easy to simulate. Check the pairs list, BTC/ETH leverage and the daily loss reset time before you buy.
- Pairs offered: 20 to 170 at the firms we track.
- Leverage: usually 1:5 to 1:20 on BTC/ETH.
- Payouts: mostly USDT or USDC.
What to check before you buy a crypto perps eval
- Leverage on the pairs you actually trade: altcoin leverage is usually lower than BTC and ETH.
- The daily loss reset time, and whether the daily loss is measured on balance or on equity.
- Simulated fees and funding: how much a round trip costs on a typical position.
- Payout method and wallet network for USDT or USDC payouts.
- Whether the firm accepts residents of your country and what identity check it runs before the first payout.