Crypto Futures Trading Glossary
Clear, concise definitions of the key terms used in crypto futures and paper trading. Use this glossary to understand the language of the markets before you trade.
Paper trading
Practicing trades with virtual money on real market data, with no financial risk. Also called demo or simulated trading.
Perpetual futures
A futures contract with no expiry date that tracks an asset's price using a funding mechanism. The most common crypto derivative.
Leverage
Borrowed exposure that multiplies position size relative to your margin. 10x leverage means a position 10 times larger than your collateral — amplifying both gains and losses.
Margin
The collateral you post to open and maintain a leveraged position. Initial margin opens the trade; maintenance margin keeps it from liquidation.
Cross margin
A margin mode where your entire account balance backs all positions, reducing liquidation risk but exposing the whole balance.
Isolated margin
A margin mode where only the margin assigned to a position can be lost, isolating risk to that single trade.
Liquidation
The forced closure of a position when losses consume the maintenance margin. The liquidation price is where this occurs.
Funding rate
Periodic payments exchanged between long and short traders that keep a perpetual future's price aligned with the spot price.
Take profit (TP)
An order that automatically closes a position at a target price to lock in profit.
Stop loss (SL)
An order that automatically closes a position at a set price to limit a loss.
Long and short
Going long profits when price rises; going short profits when price falls. Futures let you do both.
PnL
Profit and loss — the gain or loss on a position, shown as unrealized while open and realized once closed.
Frequently asked questions
What is the difference between cross and isolated margin?
Cross margin uses your whole balance to back positions; isolated margin limits risk to the margin assigned to a single position.
What does 100x leverage mean?
It means your position is 100 times larger than your margin. A 1% move against you can wipe out the position, so high leverage is high risk.
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