Step 1: What you are actually buying
Before you tap anything, be clear on what a perpetual contract is. It is a derivative that lets you trade on the price of an asset such as Bitcoin or Ethereum without owning the asset itself. Its key difference from a traditional futures contract is that it has no expiry date: a position stays open until you close it or it is liquidated. All profit, loss and funding are settled in cash (for example, in USDT); there is no delivery of the underlying asset.
The product has three core features. Leverage: you can open a position larger than the margin you post, and gains and losses are scaled up in the same proportion. Long or short: you can profit when the price rises (long) or when it falls (short). Funding: a small payment is exchanged between longs and shorts at set intervals to keep the contract price close to the spot market.
| Aspect | Spot trading | Perpetual contracts |
|---|---|---|
| Ownership | You own the asset | You hold a position; you do not own the asset |
| Leverage | None (1x) | Up to 5x for Retail Investors; up to 20x for Qualified and Institutional Investors |
| Direction | Buy only | Long or short |
| Settlement | The asset is transferred to you | Settled in cash; no asset is delivered |
| Expiry | None | None |
| Funding | None | Exchanged between traders at set intervals |
Compared with traditional futures, a perpetual behaves much the same, with one key difference: there is no expiry or settlement date. Traditional futures can drift away from spot over time, whereas a perpetual continuously anchors its price to the underlying index through the funding mechanism. Crypto-asset perpetuals trade 24 hours a day, 7 days a week.
Keep in mind that leverage cuts both ways: it magnifies gains, and it magnifies losses by the same amount. At 5x, a 4% adverse move erodes roughly 20% of your margin, and a larger move can lead to liquidation and the loss of that position's margin. The higher the leverage, the smaller the price move needed to reach liquidation.
Step 2: Activation and funding
Perpetual trading is not available out of the box. On your first visit to the perpetual trading page, you select Enable Perp Trading to begin activation. A message explains that perpetual trading carries a high level of risk and asks you to review and acknowledge the Risk Disclosure Statement, the Investor Business Terms and the Additional Terms for perpetual futures products. The accept button becomes available only after you have scrolled through the full document.
You then confirm a short disclaimer on market volatility and margin risk, and you can set your default leverage at this step. Note, though, that accepting the terms does not, on its own, open the account. Your perpetual trading account is activated only after you complete the suitability questionnaire and are assessed as suitable. If you do not meet the suitability criteria, the account is not opened and you must wait through a cooling-off period before taking the assessment again.
Once your account is active, move funds into your perpetual wallet as margin. The trading interface shows your available balance and the margin available for long and short orders; use the transfer control to move assets into the perpetual account.
Step 3: Reading the three prices on the screen
Open the trading screen and you will see three reference prices. Knowing which one applies to your position helps you avoid surprises.
| Price | What it is |
|---|---|
| Index price | The fair value of the underlying, a weighted average of several major external exchanges and, where applicable, an oracle feed. If a source moves too far from the others, its weight is temporarily removed. |
| Mark price | The reference price used to calculate your unrealised P&L and to determine liquidation. It combines several inputs to resist manipulation, so a single abnormal trade does not move it. |
| Last traded price | The most recent matched price on the order book. It reflects live activity but can spike on thin liquidity. |
The crucial point is that your unrealised profit and loss and your liquidation point are based on the mark price, not the last traded price. This is by design, so that a brief, isolated price spike does not liquidate you unnecessarily.
Step 4: Sizing the trade (leverage and margin)
Now you decide how big to go. Open the leverage control and choose a level. Retail Investors can use up to 5x, and the higher the leverage, the smaller the maximum position you can open. Leverage sets how large a position you can open for a given amount of margin, while the notional value of the position, its size multiplied by the mark price, is your true exposure to the market.
For the margin mode, HashKey Exchange MENA currently offers cross margin only, so your position uses cross margin; isolated margin is planned for a future release.
Next, understand two kinds of margin. Initial margin is the collateral required to open a position, equal to the notional value divided by your chosen leverage; for Retail Investors, it is at least 20% of the notional. Maintenance margin is the minimum equity you must keep to hold the position, and once your equity falls below it, liquidation begins. Because initial margin is always set above maintenance margin, you keep a buffer between opening a position and being liquidated.
Margin requirements are tiered: the larger the position, the higher the margin rate required and the lower the maximum leverage available. For Retail Investors the 5x cap and the at-least-20% initial margin apply regardless of position size. The full margin tier table for each contract is published on the Risk Limits page; check it before adding to a position, because doing so can move it into a tier with a higher margin requirement.
Your main risk gauge is the risk ratio, shown on the trading screen at all times, which compares the maintenance margin required against your account equity. Maintenance margin is recalculated continuously (the maintenance margin rate applied to your current notional), so the ratio moves as the market moves.
| Risk ratio | Status and what to do |
|---|---|
| Below 80% | Healthy. Normal operation. |
| 80% to 99% | Warning. Add margin or reduce your position. You are notified by in-app message, push notification and email. |
| 100% or above | Liquidation is triggered automatically. |
Here is a worked example we will keep using. Suppose you are a Retail Investor with 10,000 USDT available, opening a 5x cross-margin long on Bitcoin (no other positions), for a notional value of 50,000 USDT, and assume the maintenance margin rate for this position is 0.5%.
- At entry, maintenance margin = 50,000 × 0.5% = 250 USDT, so the starting risk ratio = 250 ÷ 10,000 = 2.5%, which is healthy.
- If Bitcoin falls 10%, you lose 5,000 USDT, equity drops to 5,000 USDT, notional falls to 45,000 USDT and maintenance margin to 225 USDT, so the risk ratio rises to 225 ÷ 5,000 ≈ 4.5%.
- As the price keeps falling, your equity shrinks far faster than the maintenance margin and the risk ratio climbs sharply. A 5x long is liquidated at roughly a 19–20% adverse move.
You do not have to calculate this yourself. The trading app shows an estimated liquidation price for each open position, and previews it when you set up an order, so you can see your buffer before and after trading. It updates as the market moves, as you add or reduce margin, and as funding accrues, but it is an estimate, and in volatile markets the price can move faster than the figure shown.
Step 5: Placing your first order
Select the contract you want to trade and review its rules on the details page. Then choose an order type; a limit order is a good starting point because it lets you control your entry price. Enter your price and size, and set your take-profit and stop-loss at the same time. Choose Buy/Long if you expect the price to rise, or Sell/Short if you expect it to fall, then confirm.
A good habit is to set take-profit and stop-loss at the moment you place the order, not after the position is open, so you decide how much loss you are willing to take before emotions get involved.
Step 6: The funding rate while you hold
Once your position is open, a new cost (or income) starts to occur at regular intervals: the funding rate. Its job is to keep the perpetual price in line with the spot index. It is a payment exchanged directly between longs and shorts, and the exchange does not collect it.
- When the rate is positive, longs pay shorts. This usually happens when the contract trades above the index.
- When the rate is negative, shorts pay longs. This usually happens when the contract trades below the index.
Funding settles at regular intervals during the day. Only positions held at the exact funding time pay or receive funding; if you open and close a position between two funding times, no funding applies. The rate is capped so that an extreme reading cannot suddenly liquidate positions.
For example, you hold a long position worth 100,000 USDT and the funding rate is 0.01%, so you pay 100,000 × 0.01% = 10 USDT; if the rate were −0.01%, you would receive 10 USDT instead. The predicted next rate and the full funding history are shown on the trading interface.
While the position is open, alongside funding, keep an eye on your unrealised P&L, your risk ratio, and your place in the auto-deleveraging queue. When the risk ratio approaches the warning level, add margin or reduce the position in time; do not rely on notifications alone, and monitor your risk ratio yourself.
Step 7: How liquidation happens
Liquidation is automatic and can happen without any action from you; in volatile markets it may even execute at a price worse than the mark price. When the risk ratio reaches 100%, the system closes your position automatically at the mark price. This is an automatic risk-control step, not a penalty, and its purpose is to stop your losses before your account can go negative. There is no grace period before liquidation; the warning is your signal to act.
From your side, the outcome is simple: you lose the margin held against the liquidated position. Beyond the trading loss itself, the maintenance margin set aside for that position is taken as the cost of being liquidated. Because positions currently share a single margin pool (cross margin), a liquidation can draw on your whole available derivatives balance, not only the margin notionally tied to that position. The margin tiers on the Risk Limits page set the maintenance margin requirement for a position and therefore determine your liquidation price.
You cannot lose more than the margin committed to the position. If a liquidation leaves your account below zero, the Insurance Fund clears the shortfall, and you are not asked to deposit additional funds to cover a liquidation loss.
Behind the scenes, the liquidation engine closes positions in a way designed to limit market impact: any shortfall beyond the bankruptcy price is absorbed by the Insurance Fund, and auto-deleveraging is used only as a last resort. When the Insurance Fund is insufficient, the system closes part of the most profitable positions on the opposite side (ranked by a mix of profit and effective leverage, applied equally to all investor types), with a real-time indicator showing your place in that queue. These mechanisms protect the wider market; they do not change the outcome for you described above.
Step 8: Closing out and settlement
Most trades never reach liquidation; you close them yourself. You can close manually with a market or limit order, or let the take-profit or stop-loss you set earlier close the position for you. When the position closes, your realised profit or loss is recorded after fees and funding. You can then transfer your assets back to your spot account.
At this point you have completed the full life cycle of a first perpetual trade: activation, funding, reading the prices, setting leverage and margin, placing the order, holding it (funding included), and closing and settlement. The same logic applies to every trade you make afterwards.
Step 9: Where to find live data and rules
The parameters in this article are illustrative. When you actually trade, the live data and rules on the following pages are what count.
| Page | What it shows |
|---|---|
| Funding rate | The predicted funding for the next settlement, and the full funding history. |
| Insurance Fund | The current and historical fund balance, and the circuit-breaker status. |
| Index | The index price, mark price and premium used to calculate funding. |
| Trading rules and margin | The full contract specifications and the margin tier table for each contract. |
Step 10: The risks you may face
Having gone through the first nine steps, you know how to trade; what matters more is knowing where you can lose. Perpetual contracts are high-risk leveraged products and are not suitable for everyone. You can lose money quickly, and your loss can equal the entire margin you put behind a position. Below are the product's main risks.
| Risk | What it means |
|---|---|
| Leverage | Losses are amplified. In cross-margin mode, a loss on one position can consume the margin held against your other positions. |
| Liquidation | Positions can be closed automatically once the risk ratio reaches 100%, possibly at an unfavourable price and without any action from you. |
| Funding | Holding a position through a funding time results in a payment that can change in both direction and size. |
| Liquidity and slippage | Your execution price can differ from the price you expected in volatile or thin markets. |
| Price gaps | Prices can jump sharply and skip intermediate levels, including your stop. |
| Collateral value | Non-cash collateral can fall in value and reduce your effective margin. |
| Auto-deleveraging | A profitable position can be closed if the Insurance Fund is depleted. |
| System and connectivity | An outage or connectivity issue may prevent you from acting in time. |
| Index and regulation | Changes to index sources or to regulation can affect pricing, availability or terms. |
If you trade perpetuals that reference traditional assets (stock and commodity perpetual contracts), there are additional risks: liquidity is lower and slippage and spreads are wider outside regular market hours; during weekends, holidays and other closed-market periods some positions may be limited to reduce-only orders and automatic liquidation may be paused or adjusted; in the initial phase no economic adjustment is made for corporate actions such as dividends, splits and consolidations, and a material event may lead to settlement, suspension or delisting; and these contracts do not represent ownership of the underlying stocks, indices or commodities, nor grant shareholder rights. Their product-specific rules are set out in the stock and commodity perpetual contracts FAQ.
Past performance and historical market conditions are not a reliable guide to future outcomes. The best defence is plain: use low leverage and modest position sizes, set a stop-loss and take-profit on every trade, check funding and your risk ratio before holding overnight, and trade only with money you can afford to lose.
Disclaimer
HashKey MENA FZE (“HashKey”) is authorised by the Dubai Virtual Assets Regulatory Authority (“VARA”) to provide Exchange Traded Derivative (“ETD”) Services in Dubai. VARA’s approval of HashKey to provide ETD Services does not constitute, and must not be construed as, an endorsement of (i) any specific ETD or (ii) any type or category of ETDs made available by HashKey.
Risks of ETDs
ETDs are complex, high-risk products and may not be suitable for all investors. Before trading any ETD offered by HashKey, you should carefully consider the following non-exhaustive risks:
- Risk of total loss – You may lose some or all of the funds you invest. In leveraged products, losses can exceed your initial deposit or margin.
- Leverage risk – Leverage magnifies both gains and losses; small movements in the underlying may result in disproportionately large losses and may trigger margin calls or the forced liquidation of your positions.
- Volatility of underlying virtual assets – Prices of the underlying virtual assets can be highly volatile and may move sharply against you, including outside trading hours.
- Liquidity risk – Market conditions may make it difficult or impossible to close a position at your desired price or at all.
- No guarantee of returns – Past performance is not indicative of future results. There is no assurance of any profit, return or capital protection.
- Counterparty, operational and technology risk – Including settlement, custody, systems, cyber-security and platform availability risks.
- Regulatory and legal risk – Changes in law, regulation or VARA requirements may adversely affect ETDs, their availability or their value.
Perpetual ETDs (perpetual futures) offered by HashKey
At this time, the ETDs made available by HashKey comprise perpetual ETDs (perpetual futures products), which are complex, leveraged derivative instruments and may not be suitable for all investors. Perpetual ETDs carry additional risks, including (on a non-exhaustive basis):
- Leverage and margin risk – Positions are traded on margin; adverse price moves can rapidly erode your equity and result in automatic margin calls, forced position reduction or liquidation.
- Funding and no-expiry risk – Perpetual ETDs do not have a fixed expiry date. You may be required to make or receive funding payments over an indefinite period, and cumulative funding, fees and spreads can materially affect returns even if the underlying price moves in your favour.
- Price dislocation risk – The price of a perpetual ETD may diverge, potentially materially and for sustained periods, from the spot price of the relevant underlying virtual asset or from prices on other venues, particularly in volatile or stressed markets.
- Close-out and liquidation risk – In stressed or illiquid markets, it may not be possible to open, reduce, hedge or close positions at your preferred price or at all; liquidation mechanisms, insurance funds and other loss-allocation tools may be applied, and you may suffer losses up to the full amount of collateral and other assets allocated to support your positions.
This statement does not describe all risks associated with ETDs or perpetual ETDs. Before entering into any ETD transaction, you should read the relevant product disclosures, terms and conditions, and the full risk disclosures for each specific ETD, including in particular the Additional Terms Applicable to Perpetual Futures Products and the Risk Disclosures for Perpetual Futures Products, and only trade if you fully understand the nature of the product and the risks involved and are able to bear the potential losses.
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