> ## Documentation Index
> Fetch the complete documentation index at: https://docs.liquid.trade/llms.txt
> Use this file to discover all available pages before exploring further.

# What are perpetual futures?

> How perpetual futures let you go long or short without owning the underlying asset.

Perpetual futures ("perps") are contracts that let you go long (bet the price goes up) or short (bet the price goes down) on an asset without owning it. Most markets on Liquid are perps, including [stocks, pre-IPO companies, commodities, FX, and crypto](https://docs.liquid.trade/markets/markets-overview.md).

## How perps differ from owning the asset

* **Long or short.** You profit when the price moves in the direction you picked, up or down.
* **No expiry.** Unlike traditional futures, perps never expire. Hold a position for minutes or months.
* **Multiplier.** You can use [leverage](https://docs.liquid.trade/trading/leverage.md) to open a position larger than your collateral.
* **Funding.** To keep the perp price close to the asset's price, longs and shorts pay each other [funding](https://docs.liquid.trade/trading/funding-rates.md) every hour.
* **Liquidation.** If losses use up your collateral, the position is [liquidated](https://docs.liquid.trade/trading/liquidations.md).

> [!NOTE]
>
> **Example:** You open a 5x long on AAPL. If AAPL rises 10%, your return is about +50% on your collateral (before fees and funding). If it falls 10%, you lose about 50%.

## Perps vs. buying the asset

| | Buying the asset (spot) | Perpetual futures |
| - | - | - |
| Direction | Long only | Long or short |
| Leverage | 1x | Up to 40x |
| Market hours | Exchange hours for stocks | 24/7 on Liquid |
| Ownership | You hold the share, coin, or metal | You hold a contract that tracks the price |
| Expiry | None | None |
| Ongoing cost | None | [Funding](https://docs.liquid.trade/trading/funding-rates.md) payments |

## Key terms

* **Collateral:** the USDC you put behind a trade. See [Leverage](https://docs.liquid.trade/trading/leverage.md).
* **Multiplier:** how many times your collateral your position is worth.
* **Notional:** the total size of the position (collateral × multiplier).
* **Mark price:** the reference price used to calculate PnL and liquidations.
* **Funding rate:** the periodic payment between longs and shorts. See [Funding rates](https://docs.liquid.trade/trading/funding-rates.md).
* **Liquidation price:** the price at which your position is closed because your collateral has run out. See [Liquidations](https://docs.liquid.trade/trading/liquidations.md).

## Next steps

> [card] [Place your first trade](https://docs.liquid.trade/about-liquid/quickstart-guide.md)
>
> From sign-up to your first trade in five minutes.

> [card] [Order types](https://docs.liquid.trade/trading/order-types.md)
>
> Market, limit, trigger, and TWAP orders.


This documentation is built and hosted on [Mintlify](https://mintlify.com), a developer documentation platform.