Whether you are just starting or looking to sharpen your trading knowledge, this glossary breaks down the essential terms you may encounter when trading perpetuals on Robinhood.

Base Currency

The asset being traded in a perpetual contract. For example, in a BTCUSD contract, BTC is the base currency.

Contract Size

The notional quantity or value of each contract. For example, a 1 BTCUSD perpetual contract represents 1 Bitcoin in value.

Funding rate

A periodic payment (every 8 hours) between long and short traders that helps keep the contract price in line with the underlying asset. A positive rate means long positions pay shorts; a negative rate means shorts pay longs. This can be found in your settlement history.

Leverage

Lets you control a larger position with a smaller amount of margin. For example, 3x leverage allows you to trade €30,000 worth of Bitcoin with €10,000 collateral. Leverage amplifies both gains and losses.

Liquidation

If your position drops in value and your collateral is no longer enough to support it, your position may be partially or fully closed (liquidated) by the partner venue. This protects against further losses and fees apply. Check out Perpetual futures liquidations for more information.

Long/Short Position

• Long: You believe the asset will go up in value
• Short: You believe the asset will go down in value

With perpetuals, you can hold either position indefinitely, if you meet margin requirements.

Maintenance Margin

The minimum amount of collateral you need to keep your position open. Falling below this amount (10% of positional notional) will trigger liquidation.

Maker/Taker Fees

Fees charged when you open or close a trade:

• Makers add liquidity (usually lower fees)
• Takers remove liquidity (usually higher fees)

Margin

The funds you post to open a position. Margin is required to open a perpetual regardless of whether leverage is applied, and is used to cover potential losses.

Quote Currency

The currency used to price the perpetual contract, such as USD or a stablecoin like USDC.

Settlement

Perpetual futures are typically settled in cash, not in the actual asset. You don’t need to own the asset to trade it.

Take Profit/Stop Loss

Risk management tools that help you lock in profits or limit losses by automatically closing a position at predefined price levels.

Tick Size

The smallest possible price movement in the market. For example, Bitcoin moves in $1 increments.

Perpetual futures are complex derivative products, and trading involves significant risk and is not appropriate for all investors, particularly for perpetuals referencing crypto assets which experience volatile price movements. Further, leveraged trading is risky as it can amplify the speed of your losses and increases the chance of you losing all of your initial investment. Please carefully consider if investing in such financial instruments is appropriate for you in light of your specific experience, risk tolerance, and financial situation. Restrictions and eligibility requirements apply.