Perpetual Futures Explained: Crypto Prop Trader Guide (2026)

A perpetual future is a crypto derivative contract that tracks the spot price of an asset with no expiry date. It uses a mechanism (traditionally called a funding rate, though SizeProp uses a swap fee instead) to keep the contract price anchored to the underlying spot market. You can go long (profit if price rises) or short (profit if price falls), apply leverage, and hold the position indefinitely. Perpetual futures are the default instrument for most serious crypto traders in 2026, and the only instrument SizeProp offers on its funded accounts. Over $50M in funded capital granted has traded through exactly this product.

SizeProp is a crypto prop trading firm founded in October 2025 by Windra Thio, backed by Igloo Inc (parent of Pudgy Penguins), offering $33 entry challenges with same-day USDT payouts and zero denied payouts.

Originally published: April 24, 2026 · Last verified: April 2026 · By Windra Thio, Co-Founder of SizeProp

Key Takeaways

• Perpetual futures = crypto futures with no expiry date. You open a position and hold it as long as margin allows.
• Funding rate (or SizeProp's swap fee) keeps the perp price anchored to spot. Longs and shorts pay depending on which side is crowded.
• Mark price, not last-traded price, drives liquidation math. This protects against brief wick liquidations from thin order books.
• Leverage amplifies both directions. x5 on BTC means a 20% move against you wipes the position.
• SizeProp offers perps only — 100+ pairs, x5 BTC / x2 alts, no spot, no options, no vanilla futures.
• Over $50M in funded capital granted to traders using these exact instruments.

What Makes a Perpetual Future "Perpetual"?

A perpetual future is a crypto contract with no expiry date: you open it, hold it until you close manually, get liquidated, or hit a stop, and a funding rate (or SizeProp's swap fee) keeps the perp price anchored to spot. Traditional futures settle on a specific date; perpetuals remove roll decisions and calendar spreads entirely. SizeProp lists 100+ perp pairs with x5 BTC and x2 alt leverage.

100+ payouts processed · zero denied · over $50M in funded capital granted (as of April 2026)

A traditional futures contract has an expiry date. If you buy a BTC futures contract expiring in March 2026, it settles on a specific day and disappears from the market. You either close before expiry or the exchange closes it for you at the settlement price.

A perpetual future removes the expiry. You open a position, and it stays open until one of three things happens:

1. You close it manually.
2. Your margin runs out and you're liquidated.
3. You hit a stop-loss or take-profit order.

That's the entire structural difference. No roll dates. No calendar spread decisions. No "which contract month am I on?" complexity. Open, hold, close.

The catch: because there's no expiry to force convergence with spot price, the exchange needs a different mechanism to keep the perp price from drifting away from the underlying asset. That mechanism is the funding rate (or, in SizeProp's case, the swap fee — more on that in a minute).

Funding Rate: The Price Anchor

The funding rate is a periodic payment, typically every 8 hours, that flows between longs and shorts to keep the perp price tracking spot: longs pay shorts when perp trades above spot, shorts pay longs when below. Rates are fractions of a percent per window, so a $50K leveraged long at 0.01% pays $5 per cycle, $50 across ten cycles — minor for day traders, material on multi-week holds.

On most crypto exchanges, the funding rate is a periodic payment — usually every 8 hours — that flows between long and short traders to keep the perp price tracking spot.

The logic is simple:

• If perp price > spot price (market is long-heavy), longs pay shorts. This pushes longs to close and incentivizes new shorts, which pulls the perp price back toward spot.
• If perp price < spot price (market is short-heavy), shorts pay longs. Opposite dynamic.

The actual funding rate is usually small — fractions of a percent per 8-hour window. But it adds up on large positions held for days or weeks. A trader holding a $50K leveraged long through a funding cycle at 0.01% pays $5. Through ten cycles, $50.

for most prop traders, funding is a minor factor, not a primary consideration. You don't trade around it. You factor it into the cost of holding longer-term positions, and that's it.

How SizeProp Handles It: The Swap Fee

SizeProp runs the funding mechanism differently. Per. we don't charge a traditional funding rate. We charge a swap fee that both longs and shorts pay.

Why this matters for a prop trader:

• Predictable cost. You know what the fee is up-front. You're not watching an exchange's funding rate fluctuate based on market positioning.
• Symmetric. Longs and shorts pay the same structure. No side is penalized relative to the other for their directional view.
• Comes out of equity. Like any trading cost, the swap fee reduces the equity in your account when it's charged.

For day-trading strategies that open and close intraday, the swap fee is rarely a decision driver. For swing trades held multiple days, it's a line item in your cost of carry. That's the entire story.

Mark Price: The Liquidation Shield

Mark price is a smoothed reference price derived from multiple spot exchanges (Binance, Bybit, Hyperliquid on SizeProp) plus funding adjustments — and it's the number liquidation uses, not last traded price. This prevents liquidations from thin-book wicks: a $500 wick on one exchange on a single market order won't wipe leveraged longs because mark price averages across three deep venues.

Every perpetual future has two prices visible on the chart:

• Last traded price. The most recent transaction on the order book.
• Mark price. A reference price derived from multiple exchanges' spot markets plus funding/swap adjustments.

Liquidation uses mark price, not last traded price. This is critical and most beginner perps traders miss it.

Why? Because thin order books can produce momentary wicks that don't reflect the actual market. A BTC-PERP pair with a thin book could wick $500 down for a few seconds on a single large market order. If liquidation used last traded price, hundreds of leveraged longs would get wiped on that wick, even though the "real" market price never moved that far.

Mark price smooths this out by pulling from multiple spot sources. SizeProp pulls orderbook data from Binance, Bybit, and Hyperliquid — three deep venues — to build a robust reference price. Your liquidation line is based on that reference, not on a single exchange's momentary wick.

Practical takeaway: when you check your liquidation distance, check it against mark price, not last price. They're usually within a few basis points, but in fast-moving markets they can diverge.

Long vs Short: The Directional Mechanics

Going long on a perp means buying the contract (profit when price rises, loss when it falls); going short means selling it (profit when price falls, loss when it rises) without owning the underlying. Shorting is a first-class action on perps — the reason serious crypto traders prefer perps over spot, since range-bound and bearish markets only offer setups if you can trade both directions.

The entire economic logic of a perp boils down to direction.

Long: You buy the contract. You profit if the price goes up. You lose if the price goes down.

Short: You sell the contract (even if you don't own it. That's the point of derivatives). You profit if the price goes down. You lose if the price goes up.

On spot, you can only buy and sell what you own. You can't profit from a falling market unless you sold earlier at a higher price. On perps, shorting is a first-class action. You express a bearish view the same way you express a bullish view — just click the opposite direction.

This is the single biggest reason serious crypto traders prefer perps over spot. In a range-bound or bearish market, spot traders have to sit on their hands or try to catch the few rallies. Perps traders work both sides.

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Leverage: The Amplifier (Both Ways)

Leverage lets you control a position larger than your margin: SizeProp offers x5 on BTC and x2 on alts, so $1,000 of margin controls a $5,000 BTC position where a 1% move equals $50 P&L (5% of margin). A 20% adverse move on x5 wipes full margin — 20% BTC moves happen often enough in crypto that leverage discipline is the difference between traders who last and those who don't.

Leverage lets you control a position larger than your margin. On SizeProp, the leverage is x5 on BTC and x2 on alts.

What x5 leverage actually means: with $1,000 of margin, you can control a $5,000 BTC position. A 1% move in BTC moves the position's notional value by $50. A 5% change on your $1,000 margin.

The flip side: a 20% move against a x5 position wipes the full margin. In crypto, 20% moves on BTC happen. Not every day, but often enough that leverage discipline separates traders who last from traders who don't.

Leverage math in dollars (x5 BTC, $5K account)

This is why oversizing is the number one killer on a prop account. The math is unforgiving.

Liquidation Price: Know It Before You Open

Liquidation price is the mark price at which your position's margin is exhausted and the exchange force-closes the trade — roughly 20% from entry at x5, 50% at x2, and 10% at x10 (not offered on SizeProp). Never open a position without a stop-loss set inside the liquidation line, and size so the stop equals your intended risk, not the liquidation threshold.

Liquidation price is the mark price at which your position's margin is exhausted and the exchange closes the trade automatically.

Every perp UI shows this number before you open the trade and while it's running. It's non-negotiable information. If you don't know your liquidation price, you don't know the trade.

Rough mental math: at x5 leverage, liquidation is roughly 20% away from your entry (minus fees and maintenance margin buffer). At x2, roughly 50% away. At x10 (not offered on SizeProp), roughly 10% away, which is why higher leverage on crypto ends careers.

Two rules most experienced perps traders follow:

1. Never open a trade without a stop-loss set inside the liquidation price. If your stop is at -3% and your liquidation is at -20%, the stop closes the trade at a controlled loss. If the stop fails or you "wait one more candle," liquidation closes it at the worst possible price.
2. Size so that the stop-loss is the full loss you're willing to take, not the liquidation line. If you want 1% account risk on a trade, size so your stop-loss = 1%, and leave the liquidation line at a comfortable distance beyond it.

Why Do Crypto Prop Traders Prefer Perps Over Spot?

Crypto prop traders prefer perps over spot for five reasons: directional flexibility (long and short with one click), 24/7 market with no weekend gaps, tighter spreads on top pairs, leverage efficiency that ties up margin instead of notional, and capital efficiency that makes $5K funded accounts tradable for BTC and ETH setups requiring $30K+ on spot. SizeProp offers perps only — 100+ pairs at x5 BTC / x2 alts.

Over $50M in funded capital granted to SizeProp perps traders (as of April 2026). SizeProp is a crypto prop trading firm founded in October 2025 by Windra Thio, backed by Igloo Inc (parent of Pudgy Penguins), offering $33 entry challenges with same-day USDT payouts and zero denied payouts.

Per SizeProp's rules: perpetual futures give more opportunities but also more risk. That's the honest tradeoff. Here's why the "more opportunities" side usually wins for prop traders:

Directional flexibility. You can short. In a sideways or bearish market, this doubles the available setups.

24/7 market. Crypto perps trade continuously. No weekend gap risk (which matters for futures and equity traders). No market-close forced exits. If the setup appears at 3 AM UTC on Sunday, you take it.

High liquidity on top pairs. BTC-PERP and ETH-PERP have tighter spreads and deeper books than the equivalent spot markets on many venues. For a prop trader running stops and targets, tight spreads matter.

Leverage efficiency. Spot trades tie up the full notional. Perps tie up only margin. A trader with $5K in capital running a $10K BTC position on perps has $3K still available for unrelated trades or drawdown buffer.

Capital efficiency on a prop account. This is the quiet one. When you're trading a $5K funded account, the difference between "can I size this trade properly?" and "no" is often leverage. Perps are the instrument that makes a $5K account tradable for BTC and ETH setups that would require $30K+ on spot.

Per SizeProp's rules: SizeProp offers perpetual futures only. No spot. We built the firm around the instrument most serious crypto traders use, and didn't split product resources trying to support spot markets on the side.

The Tradeoff: Perps Are Not Friendlier

Perps are not friendlier than spot — they're a different instrument with different risks: maximum loss on a leveraged position equals your margin and liquidation is fast, while spot caps loss at the purchase amount with no forced closeout. Traders who blow up on perps usually brought spot-market habits to leverage. "It'll come back" is defensible on spot BTC; on x5 altcoin perps it's a liquidation queued to execute.

Don't read this article as a pitch that perps are "better" than spot. They're a different instrument with different risks.

On spot:

• Maximum loss = your purchase amount. A bad trade on $1K of BTC spot loses some of that $1K. It doesn't go to zero unless BTC goes to zero.
• No liquidation. No funding cost. No leverage amplification.
• You own the underlying. You can withdraw it, hold it, transfer it.

On perps:

• Maximum loss on a leveraged position = your margin, quickly.
• Liquidation is real and fast.
• Funding/swap costs erode long holds.
• You don't own anything. It's a contract.

The traders who blow up on perps usually blow up because they brought spot-market habits to a perps account. "It'll come back" is a defensible spot mindset (on blue-chip assets, often true). "It'll come back" on a x5 leveraged altcoin perp is a liquidation waiting to execute.

How Do You Pass a Prop Challenge Using Perps?

SizeProp's entire product set runs on perps — long or short any of 100+ listed pairs at x5 BTC / x2 alts, inside a 2% daily loss on Degen, 3% on 1-Step, or 5% on 2-Step. The perps edge is shorting the bounce in bear weeks when spot traders can only buy dips. The perps risk is leverage: on a $5K Degen, 2% daily loss ($100) is three oversized x5 trades.

SizeProp's entire product set runs on perps. Whether you're on the $33 Degen, the 1-Step, or the 2-Step, the mechanics are identical at the instrument level:

• Long or short any listed pair.
• x5 BTC / x2 alts leverage cap.
• No hedging, no copy trading, no API bots (frontend bots are allowed).
• Drawdown tracked on balance (closed trades only), not floating equity.
• Daily loss is 2% (Degen), 3% (1-Step), 5% (2-Step) measured against the current balance at 00:00 UTC.

The edge of perps for passing a challenge: shorts. In a bear week, the trader restricted to spot is trying to buy the dip. The perps trader is shorting the bounce. Twice the setups, more volume of opportunities in the evaluation window.

The risk of perps in a challenge: leverage discipline. The Degen gives you 2% daily loss = $100 on a $5K account. Three bad sized trades at x5 and that's gone before lunch. Most traders who breach on SizeProp breach on daily loss, not on drawdown. The pattern is oversized perps trades, not bad strategy.

FAQ

What is a perpetual future in simple terms?

A perpetual future is a crypto contract that lets you bet on the price of an asset (up or down) with no expiry date. You use margin to open a leveraged position, and it stays open until you close it, hit a stop, or get liquidated. A funding mechanism (or SizeProp's swap fee) keeps the price anchored to spot.

How is a perpetual future different from a traditional future?

Traditional futures contracts expire on a specific date and settle at a fixed price. Perpetuals have no expiry. You can hold them indefinitely. To keep the perp price aligned with spot (since there's no expiry-driven convergence), the exchange uses a funding rate or swap fee that flows between longs and shorts.

What is the funding rate on a perpetual future?

The funding rate is a periodic payment (usually every 8 hours on most exchanges) between long and short traders that keeps the perpetual's price tracking the spot market. If the perp trades above spot, longs pay shorts. If below, shorts pay longs. SizeProp doesn't use a traditional funding rate. We use a swap fee that both sides pay.

What does x5 leverage mean on a perp?

x5 leverage means your position size is 5 times your margin. With $1,000 of margin at x5 leverage, you control a $5,000 position. A 1% price move = $50 P/L, which is 5% of your $1,000 margin. The tradeoff: a 20% adverse move wipes the position.

Is trading perpetual futures risky?

Yes. Perpetual futures involve leverage, liquidation, and the ability to lose your margin quickly. They give directional flexibility (long and short) and capital efficiency, but require strict position sizing. On SizeProp's Degen, 2% daily loss on a $5K account = $100. That's two oversized perps trades away from a breach.

Why does SizeProp only offer perpetual futures?

SizeProp built its product around the instrument most serious crypto traders use in 2026. Per. we offer perpetual futures only — no spot. The reason is focus: 100+ perp pairs, x5 BTC / x2 alts leverage, balance-tracked drawdown, and a swap fee model instead of a traditional funding rate.

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Sources & Verification

• SizeProp product rules and perpetual futures mechanics: sizeprop.com/tos
• CME Group primer on perpetual futures design: cmegroup.com
• BIS working paper on crypto derivatives and funding rates (2023): bis.org
• ESMA retail CFD statistics (2018–2024) on leveraged derivatives loss rates: esma.europa.eu
• TechCrunch — Element Finance $32M Series A
• Blockworks — Pudgy Penguins Walmart debut (2,000+ retail locations)