Understand perp trading in Phantom
Perpetual futures, also called perps, let you trade the price movement of crypto, stocks, commodities, and other assets without owning them. Perps have no expiration date. In Phantom, profit and loss are settled in USDC.
This article explains exposure, collateral, and the costs of holding a position. For opening and managing a trade, see Trade perps in Phantom.
How perps differ from spot trading #
With spot trading, you buy and hold the actual token. With perps, you hold a contract that gives you exposure to price movements:
- Long: Gains value when the price rises and loses value when it falls.
- Short: Gains value when the price falls and loses value when it rises.
Profit or loss changes while the position remains open. Closing all or part of the position realizes the result on the amount closed. Fees and funding payments also affect your final result.
You don’t receive the underlying asset when you close a perp position.
Margin and leverage #
Margin is the USDC you commit as collateral. Leverage determines how much market exposure you take relative to that margin.
For example, 20 USDC in margin at 2× leverage gives you 40 USDC of exposure.
For a long position:
- A 5% price rise produces approximately 2 USDC of profit.
- A 5% price fall produces approximately 2 USDC of loss.
For a short, the directions are reversed. These amounts are before fees and funding.
Your 40 USDC position size is exposure, not money available to withdraw. Higher leverage amplifies gains and losses relative to your margin.
Phantom uses isolated margin: each position has its own collateral. You can lose all the margin committed to a position. Adding margin puts more funds at risk without increasing position size; adding to the position increases your exposure.
Why liquidation happens #
Liquidation happens when a position no longer has enough collateral to meet its maintenance margin requirement, which is the minimum collateral needed to keep it open. The position is automatically closed, and you can lose all its margin.
Higher leverage generally brings the liquidation price closer to your entry price, leaving less room for the price to move against you.
Liquidation uses the mark price, a fair-value estimate based on oracle and market data. It can differ from the price on your chart, so liquidation can happen even if the chart doesn’t show the same movement.
To interpret the health score and liquidation buffer, see Understand position health in Phantom.
How funding affects your result #
Funding is an hourly payment exchanged between long and short positions. It helps keep perp prices aligned with the underlying asset’s spot price.
- Positive funding rate: Long positions pay short positions.
- Negative funding rate: Short positions pay long positions.
You can pay or receive funding while your position remains open. Payments accumulate over time and are reflected in your P&L. This means your result can change even if the asset’s price stays roughly the same.
Funding payments are separate from the trading fees charged when you open or close a position.
What take-profit and stop-loss percentages mean #
Take-profit and stop-loss orders trigger an order to close your position at a price you choose. They aim to take profits or limit losses, but execution and the fill price aren’t guaranteed.
When you use percentage values, they refer to your position’s profit or loss, not the percentage change in the asset’s price. Leverage makes that distinction important.
For example, with 20 USDC of margin and 2× leverage, a 5% price rise gives a long position approximately 2 USDC of profit, which is a 10% return on margin before fees and funding.
Phantom shows the corresponding take-profit and stop-loss prices on the review screen. For steps, see Trade perps in Phantom.
Where your funds are held #
Perps in Phantom are powered by Hyperliquid. Your perps balance is held there in USDC and is associated with the Ethereum address in your Phantom account.
You don’t need to fund this balance separately before trading. When you pay from your Cash account, CASH in your main wallet, SOL, or USDC on Solana, Phantom converts or transfers the funds into the perps balance and commits them as margin.
After you close a position, any remaining funds stay in your perps balance. They don’t automatically return to your original payment source. You can use available funds for another position or withdraw them to your wallet. Funds committed to positions or reserved for pending orders may not be available to withdraw.
For deposit and withdrawal steps, see Manage your perps balance.