A Perpetual Contract is a derivative product that is similar to a traditional futures contract. Unlike a traditional futures contract, however, there is no expiry or settlement date. The MEXC perpetual contract uses a special funding cost mechanism to ensure that the contract price tracks the underlying price closely.
When trading perpetual contracts, a trader needs to be aware of several market mechanics:
- Position Marking: Perpetual Contracts adopt fair price marking. The fair price determines unrealized Profits and Losses (PnL) and liquidation prices.
- Initial and maintenance margin: These margin levels determine the trader’s leverage and the point at which forced liquidation occurs.
- Funding: This refers to periodic payments exchanged between the buyer and seller every 8 hours to ensure the contract price tracks underlying prices closely. If there are more buyers than sellers, the longs will pay the funding rate to the shorts. This relationship is reversed if there are more sellers than buyers. You will only be entitled to receive or obliged to pay the funding rate if you hold a position at specific Funding Timestamps.
- Funding Timestamps: 04:00 SGT, 12:00 SGT and 20:00 SGT.
Traders can view the current funding rate for a contract on the Trade tab under “Funding Rate”.