How to Trade Stock Perpetual Futures: A Step-by-Step Guide

To trade a stock perpetual future, choose a supported market, decide whether to go long or short, select an order type, set the position size and leverage, and review the funding rate, margin requirement and estimated liquidation price before submitting the order. After the order fills, monitor the position and close it when you want to exit. 

A stock perpetual future, also called a stock perp or equity perpetual future, tracks the price of a stock without giving you ownership of the underlying shares. It has no fixed expiration date, but funding payments, trading fees and margin requirements continue for as long as the position remains open.

Key Takeaways

• Check the live market specification before trading. Leverage limits, funding intervals, order sizes and trading hours differ by market and can change.
• The mark price, not the last traded price, is what drives PnL, margin and liquidation.
• An estimated liquidation price is an estimate. On a cross-margin account it moves with funding, fees, other positions and collateral values.
• Funding is separate from trading fees and can either cost you money or pay you, depending on the rate and your direction.
• Use reduce-only orders to exit, so a closing order cannot open a position in the opposite direction.
• A stock perp keeps trading when the stock market is closed, with thinner liquidity and gap risk into the next session.

Before You Trade a Stock Perp

1. The product is available to you

Stock and ETF perp availability depends on the market, account and jurisdiction. Complete any required identity verification and check the venue's current eligibility rules before funding an account or placing an order.

2. You understand the contract

Review the market specifications shown on the trading interface. At minimum, check:

• Underlying reference asset
• Settlement asset
• Funding interval
• Maximum leverage and margin requirements
• Minimum order size, quantity increment and tick size
• Trading hours
• Index and mark price methodology
• Rules for dividends, stock splits, mergers and delistings

These terms differ across markets and can change. The live market specification is more reliable than a static list of tickers or leverage limits in an article.

3. You have eligible collateral

Perpetual futures are margin products. Your collateral supports the position and absorbs losses. Available equity determines how large a position you can open, and collateral weights may reduce how much of a non-cash asset counts toward margin.

On a cross-margin venue, other eligible assets and open positions in the same margin account affect margin health, and the figure shown as margin required is what the order locks up to open rather than a ceiling on what the position can cost you.

4. You have an exit plan

Decide before entry:

• What price or condition invalidates the trade?
• Where will you take profit?
• How much funding are you willing to pay?
• Will you hold while the underlying stock market is closed?
• How much of the account are you prepared to put at risk?

How to Trade Stock Perpetual Futures Step by Step

The exact buttons vary by venue, but the trading process follows the same sequence.

Step 1: Find a supported stock perpetual market

Open the futures market selector and search for the company name, ticker or contract symbol. Confirm that you have selected the perpetual contract rather than the underlying stock.

Check the product label before placing an order, because buying a stock and opening a long stock perp are not the same transaction.

Step 2: Choose long or short

Select your direction based on the exposure you want:

• Buy or Long. The position generally gains if the contract price rises above your entry price and loses if it falls.
• Sell or Short. The position generally gains if the contract price falls below your entry price and loses if it rises.

Shorting with a perp does not require borrowing or locating shares. You are opening a derivative position, not selling shares that you own.

Step 3: Select an order type

The most common choices are market, limit and conditional orders.

A limit order can be useful when the order book is thin or the underlying stock market is closed. A market order prioritizes execution over exact price.

Step 4: Set position size and leverage

Enter the quantity or notional value you want to trade. Then review how much initial margin the position requires.

Leverage describes the relationship between position notional and supporting margin. For example, a $1,000 position supported by $250 of margin represents 4x leverage.

Leverage = Position notional ÷ Margin

Higher leverage leaves a smaller buffer before losses threaten maintenance margin. The maximum offered by a venue is not a recommended setting. Position size should be based on the loss you can tolerate, the distance to your exit and the liquidity of the market.

Step 5: Review price, funding and liquidation information

Before submitting the order, check:

• Entry price. The expected or specified execution price.
• Order value. The notional size of the position.
• Margin required. The equity locked to open the position.
• Mark price. The reference used for PnL and risk calculations.
• Funding rate. The rate applied at the next funding interval.
• Estimated liquidation price. A guide to where the position may become vulnerable to liquidation.
• Trading fee. The maker or taker fee that applies if the order fills.

Funding is charged on the notional value of the position, not on the margin behind it. At a rate of 0.01% for one interval, a $5,000 position pays or receives about $0.50:

$5,000 × 0.01% = $0.50

Rates change at each interval, so multiplying the current rate across a long holding period is only an estimate.

An estimated liquidation price is not a guarantee. On a cross-margin account, funding, fees, collateral values, other positions and changes in account equity can move the actual liquidation threshold.

Step 6: Submit and confirm the order

Select Buy/Long or Sell/Short, then review the confirmation screen before submitting.

After execution, open the Positions panel and confirm three things: that the position size and direction are what you intended, that the average entry price is close to what you expected, and that no part of the order is still working.

A limit order that has not filled remains in Open Orders. An unfilled order does not create a position, but it may reserve available margin until it is filled or cancelled.

Step 7: Add risk-management orders

Consider placing a stop-loss and take-profit after the position opens. Use Reduce Only for exit orders when available. This prevents an order intended to close a position from accidentally opening a new position in the opposite direction.

For example, if you are long 20 contracts:

• A reduce-only sell order can reduce or close the long.
• A normal sell order larger than the open position could close the long and create a new short.

A stop-market order prioritizes execution after its trigger is reached but can fill at a worse price in a fast market. A stop-limit order controls the worst acceptable price but may remain unfilled.

Step 8: Monitor the position

Do not monitor only the stock price. Once the position is open, the numbers that move are:

• Current and projected funding
• Account maintenance margin rate
• Available equity
• Order-book depth and spread
• Whether the underlying cash market is open or closed
• Upcoming earnings and corporate actions

Funding can change direction. A position that is profitable from price movement can still have a lower net return after funding and fees.

Step 9: Close the position

To exit, open the Positions panel and close the position, either in full or in part. 

Use Reduce Only for exit orders you leave resting, such as a stop-loss or a take-profit. It stops an order that was sized against an older, larger position from opening a new position in the opposite direction after the original has already been reduced or closed.

After the order fills, confirm that the position size is zero if you intended to exit completely.

Stock Perp Trade Example

Assume a stock perp has a reference price of $50. A trader opens a long position of 20 contracts, creating $1,000 of notional exposure.

If the position uses $250 of supporting margin, the effective leverage is 4x.

The $40 change equals 4% of the $1,000 position but 16% of the $250 margin. This illustrates why leverage magnifies the effect of a relatively small price move.

Actual net PnL also depends on entry and exit execution, contract quantity, funding, trading fees and any slippage. The account can be liquidated before a simple leverage calculation reaches a 100% loss because maintenance margin and other account-level factors also apply.

What Happens When the Stock Market Is Closed?

A stock perp may continue trading while the exchange listing the underlying shares is closed. This allows traders to respond to earnings, macroeconomic releases or other news outside regular US market hours.

It also changes the risk profile:

• The live cash stock price is not available as an immediate reference.
• The perp order book is usually thinner, which widens spreads and increases slippage.
• The contract can move away from the stock's last closing price.
• The stock can reopen at a different price, causing rapid repricing.

This is where the venue's index, mark price and price-band methodology matters most, since those rules determine how the contract is valued while the reference market is shut. Check them before holding a position through a closure.

Trading 24/7 does not mean liquidity and price certainty are constant 24/7. A limit order caps the price you accept, and a smaller position with a larger margin buffer leaves more distance to liquidation if the reopening gaps against you.

How to Trade Stock Perps on Backpack

Eligible users can trade supported stock and ETF perpetual futures 24/7 on Backpack. The steps above describe the flow. Four things are specific to how Backpack runs these markets:

• Funding settles hourly. Payments stay small and frequent, and the rate adjusts to market conditions each hour. 
• Stocks and ETFs can serve as collateral. Backpack uses a unified cross-margin account, and eligible stock and ETF holdings count toward account equity. A holding can serve as margin for a perp position on the same asset, which is how a trader can hedge a stock position without selling the shares. Each subaccount stays segregated from the others.
• PnL settles every 10 seconds. Profit is realized continuously without reducing the position. With Auto Lend enabled, it enters the lending pool and earns variable yield while the position stays open, and the lent balance still counts toward account equity. Losses are debited the same way and reduce equity.
• Mark price and price bands are published. Backpack publishes its mark price methodology, index fallback logic and price-band controls in its futures specifications, which are worth reading before holding a position through a US market closure.

Backpack stock perps are derivatives and do not provide ownership of the underlying shares. Available markets and contract specifications can change, so check the trading interface for current details. Product access varies by jurisdiction.

Risks of Trading Stock Perpetual Futures

Stock perps are leveraged derivatives and can create losses quickly.

• Liquidation risk. If account equity no longer covers maintenance margin, the venue may reduce or close positions. 
• Leverage risk. A small adverse price move can produce a much larger percentage loss relative to supporting margin.
• Funding risk. Repeated funding payments can accumulate, and the rate can change unexpectedly.
• Gap and off-hours risk. The cash stock can reopen far from its previous close, while the perp may trade with limited price discovery before that reopening.
• Liquidity risk. A thin order book can increase spread, slippage and the chance that a limit order does not fill.
• Corporate-action risk. Contract adjustments for dividends, splits, mergers or delistings depend on the venue's rules.
• Cross-margin risk. Losses on one position can reduce the equity supporting other positions in the same subaccount.
• Venue risk. Trading rules, outages, custody arrangements and risk controls differ by platform.

Only trade after understanding how the specific contract calculates mark price, funding, margin and liquidation.