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Perpetual futures overview
Gate perpetual futures are derivatives designed for cryptocurrency investment, similar to traditional futures. The key difference is that perpetual futures have no expiration or settlement date. Users can go long (buy) or short (sell), making trading more flexible while offering higher leverage than traditional futures. Gate currently supports USDT-M and BTC-M perpetual contracts.
Trading mode
Gate offers two trading modes: live trading and demo trading. Live trading is a real trading mode where users trade using the actual funds in their accounts. In this mode, users are required to pay trading fees and funding fees, and any profits or losses are directly reflected in their account balances. Since live trading involves real funds, it carries higher risks. Beginners are advised to start only after fully understanding and becoming familiar with the trading rules. Demo trading allows users to experience perpetual futures trading with virtual funds. The interface and operations are identical to live trading and are clearly labeled as "Testnet." No real fees are incurred during demo trading. The platform provides virtual funds, allowing up to 0.1 BTC or 3,000 USDT to be transferred daily. These funds do not affect the users' actual assets, and the demo account balance cannot be transferred to the spot account.
Contract types
Based on the duration, contracts are categorized into perpetual contracts and delivery contracts. Based on the settlement currency, contracts can be divided into USDT-M perpetual contracts, which are settled in USDT, and BTC-M perpetual contracts, which are settled in BTC.
Basic trading terms
In trading, users can go long (buy) if they expect the market to rise, earning profits when prices increase and incurring losses when prices fall. Conversely, users can go short (sell) if they expect the market to decline. The following are some key concepts in futures trading. Because futures allow users to trade with leverage, they can open larger positions with the same amount of principal. Leverage amplifies both potential profits and losses.
Margin
Margin refers to the principle required to open a position in futures trading. Position Margin = Initial Margin + Manually Adjusted Margin In isolated margin mode, users can add or reduce margin for a position, but it cannot be lower than the initial margin.
Initial margin is the minimum amount required to open a position. Position Initial Margin = (Position Value / Leverage) + Exit Fee
Maintenance margin is the minimum amount required to keep a position from being liquidated. Position Maintenance Margin = Position Value × Maintenance Margin Ratio (MMR) + Exit Fee The maintenance margin depends on the position value and the MMR, which varies with the risk limit tier. Applicable MMR can be viewed on the Contract Details page.
Mark price
The mark price is derived from a weighted price of external markets, adjusted by a time-decaying funding basis. Gate uses the mark price, rather than the spot price, to trigger liquidations. This prevents malicious market manipulation from causing unnecessary liquidations and helps align on-platform prices with external spot markets. For details, see Mark Price Calculation.
Example
Alice buys 1 BTC spot directly at a price of 50,000 USDT without using leverage. If BTC rises 5% to 52,500 USDT, her profit is 2,500 USDT, a 5% return; if BTC falls 5% to 47,500 USDT, her unrealized PnL is -2,500 USDT, a -5% return. By contrast, Bob trades a perpetual contract with 10x leverage. At a BTC price of 50,000 USDT, he buys 100,000 contracts (equivalent to 10 BTC) with an initial margin of 50,000 USDT. If BTC rises 5%, his position value reaches 525,000 USDT, giving him an unrealized profit of 25,000 USDT, a 50% return. If BTC falls 5%, his position value drops to 475,000 USDT, resulting in an unrealized loss of 25,000 USDT, a -50% return.
| Alice – Spot Trading | Item | Bob – Gate Perpetual Futures Trading |
|---|---|---|
| 50,000 | Entry Price (USDT) | 50,000 |
| No Leverage (1x) | Leverage | 10x |
| 50,000 (1 BTC) | Position Value (USDT) | 500,000 (10 BTC) |
| 50,000 (1 BTC) | Position Margin (USDT) | 50,000 (1 BTC) |
| 2,500 | Unrealized PnL if BTC +5% (USDT) | 25,000 |
| 5% | Return % | 50% |
| -2,500 | Unrealized PnL if BTC -5% (USDT) | -25,000 |
| -5% | Return % | -50% |
Note: This example does not include funding fees, trading fees, entry fees, or exit fees. For detailed liquidation information, see Liquidation Mechanism.
Liquidation
A position will be liquidated if the margin balance falls below the MMR (MMR ≤ 100%). Unrealized PnL is calculated based on the mark price, which also determines the liquidation price. The liquidation process relies sequentially on the market, the insurance fund, and the auto-deleveraging (ADL) system. For a given contract, the MMR is fixed, while the initial margin depends on leverage. Higher leverage reduces the initial margin, bringing it closer to the maintenance margin and making the position more susceptible to liquidation. At the same time, higher leverage also amplifies potential profits, meaning risk and return increase proportionally.
Example
Suppose Alice and Bob expect BTC to rise. When BTC is priced at 50,000 USDT, Alice buys 1 BTC in spot trading, while Bob goes long in Gate perpetual futures trading with 100x leverage, purchasing 1,000,000 contracts (equivalent to 100 BTC). However, BTC unexpectedly drops to 49,900 USDT. Alice's loss rate is only 0.2%, whereas Bob's loss rate reaches 20%.
| Alice – Spot Trading | Item | Bob – Gate Perpetual Futures Trading |
|---|---|---|
| 50,000 | Entry Price (USDT) | 50,000 |
| No Leverage (1x) | Leverage | 10x |
| 50,000 (1 BTC) | Position Value | 100 BTC |
| 50,000 (1 BTC) | Position Margin (USDT) | 50,000 |
| -100 | Loss if BTC -0.2% (USDT) | -10,000 |
| -0.2% | Return % | -20% |
Later, if BTC continues to fall to 49,750 USDT, Alice's loss is 0.5%. Bob's position margin drops to only 0.5 BTC (0.5% maintenance margin), triggering liquidation and resulting in a total loss of his margin.
| Alice – Spot Trading | Item | Bob – Gate Perpetual Futures Trading |
|---|---|---|
| 50,000 | Entry Price (USDT) | 50,000 |
| No Leverage (1x) | Leverage | 10x |
| 50,000 (1 BTC) | Position Value | 100 BTC |
| 50,000 (1 BTC) | Position Margin (USDT) | 50,000 |
| -250 | Loss if BTC -0.5% (USDT) | -25,000 |
| -0.5% | Return % | -50% |
When a trader's position aligns with market movements, futures can amplify the gains of a comparable spot position, allowing higher returns with relatively small principal. Conversely, if the position goes against the market, losses are similarly magnified. Note: This example does not include funding fees, trading fees, entry fees, or exit fees. For detailed liquidation information, see Liquidation Mechanism.
Insurance fund
Liquidation is to close the position at the bankruptcy price, and the bankruptcy price is the mark price at which the margin balance (including unrealised PnL) is equal to the exit fee. If the actual fill price is better than the bankruptcy price, the remaining amount (i.e., the lesser loss) will be credited to the insurance fund, which will be activated if the liquidation order is not executed by the time the mark price breaks the bankruptcy price. For details, see the Insurance Fund.
Auto-deleveraging (ADL)
If the insurance fund is insufficient to cover a liquidation order, the ADL system is triggered. ADL reduces positions from users with the highest potential profits to complete the remaining liquidation orders. Profit ranking is determined by "unrealized PnL × leverage" (for cross-margin mode users without a set cross-margin leverage limit, the highest leverage of the position is used). Users selected for ADL will have all their pending orders canceled first. The lights on Gate website indicate the order of the current position in the ADL queue. The more lights are lit, the greater the probability that the position will be reduced in the case of ADL events. To avoid ADL, users ranked high in the ADL system are advised to close positions first and reopen them afterward.
Position mode
Cross margin mode and isolated margin mode
In isolated margin mode, the position margin is a fixed amount. It is equal to the initial margin at the beginning and may be affected by leverage, risk limit, or margin deposits or withdrawals. When the margin balance is less than the maintenance margin, the position is liquidated and the loss is limited to the allocated margin. In cross margin mode, all balances in the user's futures account are used as margin, and all positions share this margin. Users can set multiple contract positions in cross margin mode. Liquidation is triggered when the account's MMR falls to 100% or below, which may result in the loss of the entire account balance. However, unrealized profits from profitable positions cannot be used as margin for other positions.
One-way mode and hedge mode
Gate offers two position modes: one-way mode and hedge mode. Each mode is suited to different trading strategies and needs.
1. One-way mode
- In one-way mode, users can only hold positions on one side in a market, either long (buy) or short (sell). This means that to switch side, the existing position must be closed before opening a new one.
- Gate uses hedge mode by default.
- One-way mode offers flexibility, allowing users to switch between isolated and cross margin while holding a position.
2. Hedge mode
- In hedge mode, users can hold both long and short positions simultaneously under the same contract. This mode is ideal for users who want to hedge against market uncertainty by holding positions on both sides.
- However, in hedge mode, switching between isolated and cross margin while holding positions is not allowed, which increases operational complexity but enables more diverse strategies.
By selecting the position mode that best suits the needs, users can better manage risk and return, enabling more flexible operations in a volatile market environment.
Order price limit
The order price cannot deviate from the current mark price by more than 50%. If the order is intended to reduce a position, the order price cannot exceed the position's bankruptcy price. If the order is to increase a position, the order price cannot exceed the position's liquidation price. If the user still wishes to execute the order at the specified price, it is recommended to reduce the leverage and then attempt to place the order at the desired price again.
Gate reserves the final right to interpret the product. For further assistance, please visit the Gate official support page or contact our customer support team.
