About perp trading in Phantom

Perpetual futures, or perps, are contracts that let you trade the price of a token or equity without owning the token or the underlying equity itself. You can profit from price movement in either direction and use leverage to amplify gains or losses.

This article explains how perp trading works as a concept, regardless of the asset type. The same core mechanics apply whether you’re trading a crypto perp like SOL-USD or an equity perp like XYZ100.

Equity perps follow the same trading experience as crypto perps, but they have important differences in how prices are tracked relative to the underlying stock, especially outside market hours. To learn more, see About trading equity perps in Phantom.

For step-by-step instructions, see How to trade perps in Phantom.

Note: Perp trading is an advanced strategy. Make sure you understand the risks before you begin.

How perp trading works in Phantom

Phantom perps are powered by Hyperliquid, a decentralized exchange for perpetual futures. You never take custody of the token itself. Instead, when you open a position, you’re entering a contract with another trader who takes the opposite side—one long, one short.

Positions opened in Phantom can also be viewed and managed in Phantom Terminal at trade.phantom.com when you’re signed in with the same account, with the exception of limit orders, which are mobile-only.

Funding your perps balance

When you first add funds or open a position, Phantom automatically creates your Hyperliquid trading account. If you’ve previously connected your Phantom wallet to Hyperliquid, any existing positions or balances automatically appear in your perps balance inside Phantom.

Adding funds in advance isn’t required. You can open a position directly using SOL, PSOL, USDC, USDT, or another supported Solana-based token, and Phantom will automatically bridge and convert it to USDC on Hyperliquid Spot.

Adding funds in advance isn’t required, but it allows for faster execution when opening multiple positions or managing margin.

Withdrawing funds from your perps balance

You can withdraw from your perps balance back to your Phantom wallet. In the background, USDC from perps moves to Hyperliquid Spot, is swapped to SOL, and is then bridged back to your Solana balance.

Opening a position

You choose a perp contract to trade, such as a crypto perp SOL-USD or equity perp XYZ100-USD, and choose a direction:

• Long if you think the price will rise.
• Short if you think the price will fall.

You can choose to open positions right away using a market order, or wait for a preferred entry point using a limit order, which executes only when the market reaches your specified price.

Limit orders let you plan trades in advance and control your entry price, rather than accepting the current market rate. Once the limit price is met, the order automatically executes and becomes an open position.

Then choose your funding source, which can be either your perps balance or a Solana-based token.

Next, set your leverage (from 1× up to the market’s maximum). Your position size is calculated as margin × leverage. The order is then matched against another trader on the opposite side.

To open a position, there’s a minimum size of 10.25 USDC. For example, if your margin is 5.15 USDC and you use 2× leverage, your position size is 10.30 USDC, which meets the minimum.

Limit orders are currently available only in the Phantom mobile app and aren’t supported in Phantom Terminal.

Understanding position metrics

Every perp position you open in Phantom displays key metrics that help you monitor performance and manage risk in real time.

Managing positions

Setting stop-loss and take-profit

Stop-loss and take-profit are auto-close order types. They automatically close your position when a specified condition is met, helping you manage risk or lock in gains without monitoring the market constantly.

You can set stop-loss and take-profit based on any of the following:

• PnL percentage relative to your entry price.
• PnL amount in USDC gained or lost.
• Target market price.

When the condition is met, the position (or remaining size) is closed at the market price at that time.

Adding to or reducing a position

• Adding to a position increases exposure. Your entry price becomes the weighted average of your existing and new entries, which can shift PnL and liquidation price.
• Reducing a position (partial closure) decreases exposure. The closed portion is settled and any realized PnL returns to your perps balance. The remaining position stays open (with its original entry), though liquidation may adjust.

Adding or reducing margin

• When you add margin, your position size stays the same, but your liquidation price moves further away, giving you more buffer.
• When you remove margin, your position size stays the same, but liquidation moves closer, increasing liquidation risk while returning funds to your perps balance.

Reversing a position

You can flip direction in a single action. Reversing closes your current position (realizing PnL back to your perps balance) and opens a new position in the opposite direction at the current market price, typically keeping the same size. This is useful when your market view changes and you want to switch from long to short (or short to long) without managing multiple steps.

Closing positions

You can fully close a position at any time. If you also have positions directly on Hyperliquid tied to the same Phantom wallet, they will appear in Phantom and can be closed there.

When a position closes, realized PnL (and any remaining margin) returns to your perps balance. You can also partially close (reduce) to realize gains/losses on only part of the position.

Leverage and margin

Margin is the USDC you post as collateral. Leverage multiplies exposure by letting you control a larger position size than your margin alone.

For example:

• You deposit 100 USDC as margin.
• You use 5× leverage to open a $500 long position on XYZ100.
• If XYZ100 rises 1%, your gain is $5 (a 5% return on your margin).
• If XYZ100 falls 20%, your margin is wiped out and the position is liquidated.

Phantom uses isolated margin, so only the funds assigned to a specific position are at risk. Other funds in your perps balance aren’t affected.

Leverage limits vary by market. Equity perps typically support lower maximum leverage than crypto perps, reflecting the different risk profiles of these assets.

Liquidation

Liquidation occurs when your margin is no longer sufficient to cover potential losses. The system automatically closes your position to cap losses at your committed margin.

For example:

• If you go long on BTC with 3× leverage, a ~33% drop in BTC’s price would liquidate your position.
• At 20× leverage, it would take only a ~5% price move against you to be liquidated.

Funding rate

The funding rate keeps perp prices aligned with the token’s spot price. It’s a small, recurring payment exchanged between traders on opposite sides of a contract.

• When most traders are long: the rate is positive, and longs pay shorts.
• When most traders are short: the rate is negative, and shorts pay longs.

Your perp position in Phantom will have these two metrics, among others:

How to read it:

• A positive funding payment (for example, +$5) means you received funding.
• A negative funding payment (for example, –$5) means you paid funding.

These payments are reflected directly in your PnL and aren't separate transactions in your balance.

For example:

You open a long position on XYZ100-USD with:

• Position size: $100,000
• Funding rate: +0.00125% per hour
• Duration: 4 hours

Funding payment is calculated as: Position size × Funding rate × Hours held = $100,000 × 0.0000125 × 4 = $5.

Because the rate is positive and you’re long, you pay $5 in funding to short traders over those 4 hours.
If the rate were negative (–0.00125%), the direction would flip, and you would receive $5 instead.

Profits and losses

Your profits and losses (PnL) primarily reflect how far the market price has moved from your entry price:

• If you go long on SOL at $200 and SOL rises to $205, your position gains value.
• If it drops to $195 instead, your position loses value.

PnL is realized when you close or are liquidated. In perps, one side’s gains come from the other side’s losses. The protocol adjusts margin balances in real time to enforce this.

Risks and how to manage them

Perp trading offers flexibility, but it also comes with real risks. Here’s how to understand and manage them.

Price volatility

Perp markets move quickly, and leverage magnifies those moves. Even a small price swing can significantly impact your PnL.

Manage it by using lower leverage and setting a stop-loss.

Liquidation

Higher leverage brings liquidation closer to your entry price.

Manage it by monitoring your liquidation price, add margin for buffer, and set a stop-loss to exit earlier.

Funding rates

Funding payments flow between longs and shorts every hour, depending on market imbalance. Over time, these can impact profitability.

Manage it by checking the current rate, watching cumulative payments, or reducing/closing if funding becomes costly.

Why you would want to use perps

Perpetual futures offer a number of distinct advantages compared to spot trading:

Trade with more flexibility

Benefit from both rising and falling markets without rearranging spot holdings.

Amplify returns with leverage

Control larger positions with less upfront capital. Leverage increases both gains and losses and can lead to liquidation if not managed.

Hedge existing positions

Offset exposure (for example, short SOL-USD while holding SOL) to reduce downside without selling spot.

Access deeper liquidity

Perps often have more volume than spot, helping you enter/exit efficiently, even on assets with limited spot liquidity.

Powered by Hyperliquid

Perp trading in Phantom is powered by Hyperliquid, a decentralized platform built specifically for perpetual futures.

If you’ve previously used Hyperliquid with your Phantom wallet, your positions and balance will automatically appear in your perps balance inside Phantom.

There’s nothing to set up. Just deposit and start trading.