Perpetual Futures Glossary

A derivative contract that tracks the price of an underlying asset without an expiry date. Traders go long (betting price rises) or short (betting price falls) with leverage, and can hold positions indefinitely. The most liquid leveraged instrument in financial markets — over $60 trillion in annual global volume.

A periodic payment (every 8 hours on most exchanges) between long and short traders that keeps the perpetual futures price anchored to the spot price. When longs pay shorts (positive funding), the crowd is net long. When shorts pay longs (negative funding), the crowd is net short. Extreme funding readings are contrarian indicators.

A calculated fair value price derived from multiple external spot exchanges, used to determine unrealized PnL and trigger liquidations. Resistant to manipulation on any single exchange. Your liquidation price is based on mark price — not the chart price (last price).

The most recent trade price on that specific exchange's order book. Used for candlestick charts and most stop loss triggers. Can be temporarily moved by large orders or thin liquidity — which is why liquidations are based on mark price instead.

A multiplier that allows traders to control a larger position with less capital. At 5x leverage, $1,000 controls a $5,000 position. Gains and losses are both multiplied by the leverage factor. Higher leverage means a smaller adverse price move triggers liquidation.

The automatic closure of a leveraged position by the exchange when the trader's margin falls below the maintenance margin requirement. At 5x leverage, a ~20% adverse move triggers liquidation. At 10x, ~10%. The position closes at a loss of all allocated margin — the asset can recover, but the position cannot.

The collateral deposited to open and maintain a leveraged position. At 5x leverage on a $5,000 position, the required margin is $1,000. Margin is the maximum you can lose on an isolated position.

A margin mode where each position has its own dedicated margin allocation. If the position is liquidated, only the allocated margin is lost — the rest of the account balance is untouched. The safer default for most retail traders.

A margin mode where all open positions share the entire account balance as collateral. A losing position can draw from the balance supporting other positions, creating cascading risk. A single bad trade can wipe the entire account.

A conditional order that automatically closes a position when price reaches a specified level — the level where the trade thesis is invalidated. Non-negotiable in leveraged markets. Without a stop loss, the maximum loss on a position is 100% of margin (liquidation).

Target price levels at which a position is closed for a profit. Vault Protocol defines three targets on every signal: TP1 at 1.33× the risk distance, TP2 at 2.0×, and TP3 at 3.0×. The backtest is calculated using TP1 as the exit — TP2 and TP3 represent additional upside.

The total number of outstanding perpetual futures contracts currently open. Rising OI means new money is entering the market. Falling OI means positions are being closed. OI + price direction together indicate whether a price move has new conviction behind it or is driven by position liquidations.

The percentage of trader accounts positioned long versus short on a given contract. Extreme readings (80%+ long or short) indicate crowded positioning and historically precede violent reversals when sentiment shifts. Used as a contrarian context signal.

A 0-100 score assigned to each Vault Protocol signal based on how many independent analytical layers aligned simultaneously — momentum, market structure, trend, macro regime, sentiment, and funding. Higher scores indicate more layers aligned. Scores above 80 are graded 🔥 HIGH CONVICTION.

The percentage of trades that close at a profit. Vault Protocol's verified win rate is 63% — calculated using honest methodology where stop hit before target = loss. Most platforms inflate win rates by counting a win if price ever touched the target, even if the stop was hit first (look-ahead bias).

The ratio of average winning trade size to average losing trade size. Vault Protocol's ratio is 1.33× — wins average 33% larger than losses. This asymmetry is what makes a 63% win rate consistently profitable: even during losing streaks, the mathematical edge reasserts over the full sample.

The average amount gained or lost per trade, calculated as: (Win rate × Avg win) − (Loss rate × Avg loss). Positive expectancy means the system makes money on average across a large sample. Vault Protocol's expectancy per trade is approximately +1.46% at 1× leverage.

The peak-to-trough decline in account value during a losing period. Vault Protocol's worst actual drawdown over 24 months was ~24% (at 5× leverage, 10% position sizing), recovered within 27 days. Understanding your system's historical drawdown is essential before trading with real capital.

A validation method that runs thousands of alternative sequences from the same set of trade results to show the distribution of possible outcomes. Vault Protocol ran 10,000 bootstrap-resampled paths — every single path was profitable at all three leverage configurations tested.

A backtesting error where future information is inadvertently used in historical calculations. The most common form: counting a trade as a win if price ever touched the target — even if the stop was hit first. Vault Protocol's honest methodology eliminates this: stop hit before target = loss, always. This reduced the inflated 81% win rate to the honest 63%.

The calculation of how much capital to risk on a single trade. Determined by stop distance and maximum risk per trade percentage — not by leverage or gut feel. Correct position sizing is the primary determinant of whether a trader survives losing streaks.

The daily morning brief delivered to all Vault Protocol subscribers at 8:30 AM ET. Covers VIX, DXY, Fear & Greed, funding rate environment, and what Vault Protocol is watching that day. Provides the macro context that makes every signal card make sense.

A 0-100 sentiment index measuring overall crypto market sentiment. Readings below 20 indicate Extreme Fear — historically favorable for long entries. Readings above 80 indicate Extreme Greed — historically favorable for short entries. Vault Protocol suppresses crypto short signals when Fear & Greed is at or below 15.

A measure of an asset's average price movement over a recent period. Used to calibrate stop loss distances. Vault Protocol places stops at 1.5× ATR from entry on every signal — wide enough to avoid normal market noise, tight enough to define a clear exit if the trade is wrong.

Commodity Futures Trading Commission — the US regulatory body that oversees futures and derivatives markets. On May 29, 2026, the CFTC approved the first regulated perpetual futures products for US retail traders, opening a $60+ trillion annual market to US retail participation through licensed exchanges.

Now you know the language. Learn the edge.

Vault Protocol applies every concept in this glossary — funding rates, OI, mark price, ATR stops — to 11 assets every 4 hours. 343 verified setups. 63% win rate. Start free for 14 days.

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