> For the complete documentation index, see [llms.txt](https://docs.coinlocally.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.coinlocally.com/perpetual-contracts/introduction.md).

# Introduction

Welcome to the **Coinlocally Perpetual Contracts Guide** — your go-to resource for mastering perpetual futures trading on our platform, where you can capitalize on market movements without the limitations of expiration dates.

A **perpetual contract** is a type of futures contract that has **no expiration or delivery date**, allowing it to be held indefinitely. This flexibility enables traders to profit from the **price fluctuations of digital assets** by taking **long (buy)** or **short (sell)** positions based on their market outlook.

### **Key Features of Perpetual Contracts**

#### **1. No Expiration Date**

Unlike traditional futures contracts, which settle on a specific date using the average price of the underlying asset in the final hour, perpetual contracts **do not expire**. They can be held continuously without delivery.

#### **2. Funding Fee Mechanism**

To keep the perpetual contract's price aligned with the spot market, a funding fee mechanism is employed. This mechanism anchors the contract price to the market price, ensuring price alignment over time.

#### **3. Mark Price**

Perpetual contracts use a **mark price** to calculate unrealized profit and loss (PnL). This helps minimize unnecessary liquidations caused by temporary price volatility.

#### **4. Real-Time Settlement**

PnL is settled **every minute**, turning unrealized PnL into realized PnL continuously. This real-time settlement enhances capital efficiency and fund utilization.

#### **5. Laddered Maintenance Margin Rate**

The **maintenance margin rate** is the minimum collateral required to sustain an open position. A **laddered margin system** is applied:

* As a trader's position size increases, the maintenance margin rate increases.
* Consequently, the **maximum available leverage decreases** with larger positions, managing risk across different exposure levels.

#### **6. Forced Partial Liquidation**

Suppose a trader's margin rate falls **below the current tier's maintenance margin + closing fee rate** but remains **above the minimum tier's maintenance margin + closing fee rate**. In that case, the system does not fully liquidate the position. Instead:

* A **partial reduction** is triggered to reduce the position by two tiers.
* If the resulting margin ratio satisfies the lower tier's requirements, the reduction stops.
* If not, the reduction continues until the required margin level is met.

In **position mode**, the position is frozen during the forced reduction process. In **cross margin mode**, the entire perpetual contract account is frozen until the reduction is complete.