What a Perpetual Actually Gives You (and What It Does Not)

This is the page we would want someone to read before their first trade, and it is the one most likely to talk you out of one.

What you own

A perpetual futures contract is an agreement whose value tracks a reference price. When you hold a long position on SPCX, you own a contract that gains value if SpaceX’s reference valuation rises. You do not own:

• Shares. Not a fraction of one, not a claim on one.
• Shareholder rights. No votes, no information rights, nothing.
• Dividends. On equity perpetuals, you do not receive them.
• Any IPO allocation. If SpaceX lists tomorrow, holders of this contract get nothing from that event beyond whatever the price does.

What you have is directional exposure. For a trade measured in days or weeks, that may be exactly what you want. As a way to “own a piece of SpaceX,” it is a category error.

Funding: the cost that compounds

Perpetuals have no expiry, so something has to keep the contract price tethered to the reference. That mechanism is funding — a payment every hour between longs and shorts, depending on which side is crowded.

The hourly number looks like nothing. Annualise it and it becomes the dominant term. A market at 0.01% per hour is over 80% a year. That is not a fee you can trade around; it is a headwind on every hour you hold.

This is why perpetuals fit views expressed over weeks and fail at multi-year theses. If you believe an asset will be worth much more in five years, a perpetual will bleed you out long before you are proven right. You can see current rates on the funding rate table.

Liquidation: the risk leverage actually creates

Leverage does not just multiply gains and losses. It creates a price at which your position is closed for you, whether or not your view was correct.

A shareholder who is right about a company but wrong about timing simply waits. A leveraged perpetual holder in the same position gets liquidated on the way to being right and receives nothing when the move eventually happens. This is the single most common way accounts die, and the higher the leverage, the closer that price sits to where you entered.

On a valuation-marked asset like a pre-IPO perpetual, the reference can reprice in steps rather than continuously — which means the move to your liquidation price can happen faster than any stop you set.

When a perpetual is the right instrument

• You have a directional view over days to weeks.
• You want exposure to something with no accessible alternative — a private company, or a market whose contract size is out of reach.
• You want to hedge an existing position.

When it is the wrong one

• You are trying to buy and hold for years.
• Your thesis is “this company will be huge eventually.”
• You want the thing itself — shares, or metal in a vault.
• You cannot afford to be liquidated and be right afterwards.

We earn a commission when people open accounts through our links, and we would rather say this plainly than have you find it out with money.

Common questions

What do I actually own when I hold a perpetual?

A contract whose value tracks a reference price. Not shares, not a fraction of a share, no shareholder rights, no dividends, and no allocation at any IPO. You have directional price exposure and nothing else.

Why is funding more important than the trading fee?

Trading fees are a fraction of a basis point once. Funding is charged every hour for as long as you hold. A market at 0.01% per hour costs over 80% a year, which usually exceeds any realistic edge on a long-held position.

Can I be liquidated even if my view is correct?

Yes, and this is the most common way accounts die. Leverage creates a price at which your position is closed for you. A shareholder who is right about a company but wrong about timing simply waits; a leveraged holder is closed out and receives nothing when the move eventually arrives.

When is a perpetual the right instrument?

A directional view over days to weeks, exposure to something with no accessible alternative, or hedging an existing position.

When is it the wrong instrument?

Buying and holding for years, a thesis that a company will eventually be huge, wanting the asset itself, or any situation where being liquidated and then proven right would be unacceptable.