Perpetual futures vs. traditional futures: What changes without an expiry date?

Traditional futures trading comes with a deadline. Perpetual futures remove it. That sounds like a small change, but it affects how the contract tracks the underlying market, what it may cost to keep a position open, and how traders manage risk.

Both contract types let traders take a view on rising or falling prices without buying the underlying asset. Both can also use leverage, which increases exposure and can magnify losses as well as gains. The main difference is what keeps each contract tied to the market it follows.

This article is for informational purposes only and should not be construed as financial or investment advice. Past performance does not guarantee future results.

Perpetual and traditional futures at a glance

Neither format is automatically better. A dated futures contract may suit exposure tied to a particular month, while a perpetual can keep the same position open without a scheduled roll.

The trade-off is that funding can change while the position remains open.

Why expiry matters in a futures contract

A traditional futures contract sets the terms for buying or selling an asset at a future point in time. The exchange standardizes details such as the contract size, delivery month and settlement method.

The expiry date creates a natural endpoint. Before it arrives, a trader can close the position, move the exposure to a later contract or allow the contract to settle. Settlement may involve a physical delivery of the underlying asset, such as gold, or crude oil, or a cash payment, depending on the product.

Futures do not all expire on the same schedule. Monthly, quarterly and other cycles exist, and the final trading day varies by contract. The contract specification – not a general rule about futures – determines the exact date and settlement process.

How futures prices move toward the spot market

A dated futures price may sit above or below the current spot price. This difference is known as the basis. Carrying costs, interest rates, market expectations and the time left before settlement can all affect it.

As expiry approaches, the futures and spot prices generally move closer together. If a meaningful gap remained at settlement, traders could potentially exploit the difference between the two markets. This convergence gives traditional futures their main price anchor.

What it means to roll a position in futures trading

A trader who wants exposure beyond expiry can close the near-dated contract and open one with a later date. This is called rolling.

A roll involves two trades, and the later contract may have a different price. Trading fees, spreads and the price difference between contract months can affect the result.

For example, imagine a trader holds a September gold futures position but wants to maintain exposure into December. The trader could close September and open December. If the December contract trades higher, moving between the two changes the economics of the position even if the spot gold price has barely moved.

How perpetual futures stay close to the underlying price

A perpetual futures contract has no fixed settlement date. A position may stay open while the trader continues to meet margin requirements and the contract remains listed.

Without expiry, there is no final settlement date pulling the contract toward spot. Perpetuals therefore use other mechanisms – most notably funding payments and a reference price – to discourage a lasting gap.

Funding payments explained

Funding is a periodic payment exchanged between traders holding long and short positions. It is not usually a fee paid to the exchange.

When a perpetual trades above its reference market, the funding rate is commonly positive and long positions pay short positions. When it trades below the reference market, the direction may reverse. These payments make it more costly to remain on the crowded side of the market and can help bring the contract price back toward its reference.

Funding frequency, calculation and caps vary by venue and contract. Eight-hour intervals are common in crypto markets, but there is no universal schedule or formula. Traders need to check the terms of the specific contract.

Funding is also not fixed. A position that is inexpensive to hold today may face a different rate tomorrow as market conditions change.

Perpetual future funding example

Suppose a trader has a $3,200 long position in a perpetual contract and the next funding rate is 0.015%. If longs are paying shorts, the funding payment would be $0.48:

$3,200 × 0.015% = $0.48

That is one payment, not the total cost of holding the position. A new rate may apply at the next funding time. The direction could also reverse, in which case the long position may receive funding instead.

Expiry costs and funding costs are not the same

Traditional futures and perpetuals can both create holding costs, but those costs arrive differently.

With dated futures, the main issue for a continuing position is the roll. The price of the next contract may be higher or lower than the expiring one, and completing the two trades can add fees and spread costs.

With perpetuals, there is no scheduled roll. Instead, funding may be paid or received at regular intervals. Holding a position through several funding periods can make those payments material, particularly when the market becomes strongly tilted toward longs or shorts.

This makes the intended holding period relevant. Removing expiry removes the calendar deadline, but it does not make long-term exposure cost-free.

Where leverage and margin fit in

Futures positions are typically opened by depositing initial margin rather than paying the full value of the exposure. This creates leverage: a smaller amount of capital controls a larger position.

As a hypothetical example, depositing $1,500 to open a $6,000 position creates 4x exposure. A 3% move in the underlying market changes the position value by about $180 before fees and funding. That equals 12% of the initial $1,500 in either direction.

Margin is not the purchase price of the contract. It is collateral that supports the position. If losses reduce the account below the required maintenance margin, the position may be liquidated automatically. The precise liquidation point depends on the venue, contract, margin model and applicable charges.

Risks that apply before the contract type

The absence or presence of an expiry date does not remove the core risks of futures trading.

• Leverage risk: A relatively small price move can create a much larger gain or loss compared with the margin deposited.
• Liquidation risk: A platform may close a position if available collateral falls below its requirement.
• Liquidity risk: A thin order book can make it harder to trade at the expected price.
• Execution risk: Stop and take-profit orders trigger instructions, but they do not guarantee a particular exit price.
• Price-reference risk: The index, mark price and last traded price may differ during volatile conditions.
• Contract risk: Trading hours, funding rules, settlement methods and margin terms can vary or change.

Perpetuals add funding-rate risk. Traditional futures add expiry and rollover risk. Both products can lose money quickly when leverage meets a sharp market move.

Risk management tools when trading futures contracts

How perpetual futures differ from event contracts

OG.com also offers prediction markets that trade event contracts, which work differently from futures linked continuously to an asset price.

An event contract asks whether a defined outcome will happen – for example, whether an economic release will exceed a stated level. Its price can be read as the market-implied probability of that outcome. A contract priced at 62¢ implies a 62% market view at that moment and settles at either $1 or $0 under the market rules.

A perpetual futures position, by contrast, tracks changes in an underlying market and has no binary $1-or-$0 settlement. Its profit or loss depends on the price move, position direction and size, along with funding, fees and other contract terms.

How to trade perpetual futures with OG.com

1. Create an account: Sign up and complete identity verification. Access to perpetual futures is subject to eligibility.
2. Explore crypto perps: Choose an available cryptocurrency contract and review its margin requirements, fees and funding arrangements.
3. Review and trade: Fund your account, choose your position size and decide whether to go long or short. A limit order lets you set the highest price you’ll pay or the lowest price you’ll accept, but execution isn’t guaranteed.
4. Monitor your position: Track price movements, funding payments and your margin balance. Leverage amplifies gains and losses, and insufficient margin can lead to liquidation.

FAQs about dated and perpetual futures

Which type of futures contract has no expiry date?

A perpetual futures contract has no scheduled expiry. A traditional futures contract ends on a date set in its specification, although a trader can close it earlier or roll exposure into another contract.

Do perpetual futures always follow the spot price exactly?

No. A perpetual can trade above or below its reference market. Funding and mark-price mechanisms are designed to limit persistent differences, but temporary gaps can still occur, particularly when markets move quickly or liquidity is low.

Can funding turn a profitable price move into a loss?

It can. Trading profit and loss, funding and fees are separate parts of the result. Repeated funding payments may reduce or outweigh a gain from the underlying price move, especially over a longer holding period.

Is rolling a futures contract the same as paying funding?

No. Rolling means closing a dated contract and opening a later one. Funding is a recurring transfer between long and short perpetual positions. Both can affect the cost of maintaining exposure, but they work differently.

Can a perpetual position stay open forever?

There is no scheduled expiry, but “perpetual” does not guarantee that a position will remain open indefinitely. It can be closed by the trader, liquidated for insufficient margin or affected by a contract delisting or other venue rules.

What price is used to liquidate a perpetual futures position?

Many venues use a mark price rather than the latest traded price. The calculation is contract-specific, so traders should review the product terms to understand the relevant reference price and maintenance margin threshold.

Important Information: OG.com provides technology in order to onboard and trade products on OG.com’s CFTC-regulated exchange and clearinghouse: North American Derivatives Exchange, Inc., which does business under the brands OG.com Markets and OG.com Prediction Markets, as well as, through OG.com’s CFTC-registered Futures Commission Merchant (Foris DAX FCM LLC or OG.com Broker).

OG.com Markets offers both prediction market event contracts (Prediction Markets Contracts), as well as margined derivatives, including single stock futures and perpetuals (Futures) (Prediction Markets Contracts and Futures are collectively referred to as OG.com Markets Products). Prediction Markets Contract can be accessed directly on OG.com Markets or through a CFTC-registered FCM, including OG.com Broker, or an Introducing Broker (IB). Futures must be accessed through a CFTC-registered FCM, including OG Broker or an IB.

Trading OG.com Markets Products involves risk and may not be appropriate for all. By trading you risk losing your cost to enter any transaction, including fees. You should carefully consider whether trading OG.com Markets Products is appropriate for you in light of your investment experience and financial resources. Any trading decisions you make are solely your responsibility and at your own risk.