Futures Trading

Contracts, margin, liquidation and funding — the mechanics of leveraged products and their distinct failure modes.

• 1

  What Futures Contracts Are

  A futures contract is an agreement about a future price, standardised and cleared by a venue. Perpetuals remove the expiry date and replace it with a funding payment — a small change with large consequences.

  8 min read

• 2

  Leverage, Margin and Liquidation

  Leverage does not increase your edge. It compresses the distance between your entry and the point at which the venue closes your position for you — and that distance is the only one that matters when it runs out.

  9 min read

• 3

  Funding and Carrying Costs

  A leveraged position is rented, not owned. Funding, roll costs and fees accrue whether or not you are right, and on longer holds they can quietly exceed everything else you are paying.

  8 min read