Perpetual futures are an advanced crypto trading instrument available on ZebPay. Unlike spot trading where you buy and hold an asset, perpetual futures let you take positions on the direction of crypto prices without owning the underlying coin. This guide explains how perpetual futures work and what Indian traders need to know.
What are Perpetual Futures?
A perpetual futures contract is a derivative instrument that lets you speculate on the price of a cryptocurrency going up (long) or going down (short). Unlike traditional futures, perpetual futures have no expiry date, meaning you can hold the position as long as you maintain sufficient margin.
Key concepts:
Long position: You profit if the price goes up. You lose if the price goes down.
Short position: You profit if the price goes down. You lose if the price goes up.
Leverage: Perpetual futures use leverage, meaning you can control a position larger than your actual capital. For example, 10x leverage means ₹1,000 of margin controls a ₹10,000 position. Leverage amplifies both gains and losses.
Liquidation: If the price moves against your position and your margin falls below the maintenance level, your position is automatically closed (liquidated) and you lose your margin.
Funding Rate: To keep the perpetual futures price aligned with the spot price, periodic funding payments are made between long and short position holders. If the funding rate is positive, longs pay shorts. If negative, shorts pay longs.
Is Perpetual Futures Trading Legal in India?
Derivative trading on crypto assets exists in a regulatory grey area in India. Crypto derivatives are not regulated by SEBI. However, trading them on a platform operating in India is not explicitly illegal.
Profits from crypto derivatives trading are likely taxable as business income or capital gains, depending on the frequency and nature of trading. Consult a qualified tax professional for your specific situation. Tax rules are subject to change.
How to Trade Perpetual Futures on ZebPay
ZebPay offers Perpetual Futures trading as part of its product suite.
Step 1: Complete KYC and Fund Your Account
Ensure your ZebPay account is KYC-verified and has sufficient INR or crypto balance.
Step 2: Navigate to Futures
Open the ZebPay app and find the Futures or Derivatives section.
Step 3: Select Your Market
Choose the perpetual futures pair you want to trade, such as BTC-USDT perp or ETH-USDT perp.
Step 4: Choose Leverage
Select your leverage level. Lower leverage (2x to 5x) is less risky than higher leverage (10x to 50x+). Beginners should use the lowest available leverage until they understand how the product works.
Step 5: Go Long or Short
- Tap Long/Buy if you expect the price to rise
- Tap Short/Sell if you expect the price to fall
Step 6: Set Position Size and Stop Loss
Enter your position size. Always set a stop-loss order to limit your potential loss if the market moves against you.
Step 7: Monitor and Manage
Monitor your position actively. Perpetual futures are not buy-and-hold products. Leaving a leveraged position unmonitored in a volatile market can lead to rapid liquidation.
Risk Warning: Perpetual Futures are High-Risk Products
Perpetual futures are significantly riskier than spot trading. Here is why:
Leverage amplifies losses: A 10x leveraged long position will be fully liquidated if the price drops by 10%. On a 1x spot position, a 10% drop means a 10% loss. On 10x leverage, it means total loss of margin.
Funding rate costs: If you hold a position for an extended time, funding rate payments can erode your margin.
Volatility: Crypto markets can move dramatically in minutes. Liquidation can happen very quickly.
Complexity: Perpetual futures require understanding margin, leverage, liquidation prices, and funding rates. This is not a product for beginners.
Do not use perpetual futures as your first crypto product. Only use them after gaining significant experience with spot trading and after understanding all the mechanics thoroughly.
Always conduct your own research before investing. Crypto markets are unpredictable and past trends do not guarantee future returns.
Read more: Crypto Trading Strategies
Perpetual Futures vs Spot Trading
| Feature | Spot Trading | Perpetual Futures |
|---|---|---|
| Own the asset | Yes | No (contract only) |
| Leverage | No | Yes (amplifies risk) |
| Risk of liquidation | No | Yes |
| Funding rate | No | Yes |
| Suitable for | All levels | Experienced only |
| Tax treatment | Capital gains | Likely business income |
Frequently Asked Questions About Perpetual Futures in India
Can a beginner trade perpetual futures in India?
Perpetual futures are not recommended for beginners. Master spot trading first and understand leverage, margin, and liquidation before attempting futures.
What leverage should I use?
Lower leverage is safer. Many experienced traders use 2x to 5x maximum. Never use leverage beyond what you can afford to lose entirely. Always conduct your own research.
How are perpetual futures profits taxed in India?
Tax treatment depends on whether trading is considered investment or business activity. Frequent trading is typically taxed as business income. Consult a qualified tax professional. Tax rules are subject to change.
What is a stop-loss and why is it important for futures?
A stop-loss is an instruction to close your position if the price reaches a specified level. It limits your loss. In futures trading, a stop-loss is essential because positions can move to liquidation very quickly in volatile markets.
Can I trade BTC/ETH perpetual futures on ZebPay?
Check the ZebPay app for current available perpetual futures pairs and product terms.
What happens if I get liquidated?
If your position is liquidated, you lose the margin (collateral) used to open the position. This is a total loss of that margin.
Final Thoughts
Perpetual futures on ZebPay offer experienced traders a way to take directional positions on crypto without holding the underlying asset. However, they are high-risk products involving leverage that can result in rapid and total loss of your margin.
Only approach perpetual futures after mastering spot trading, understanding margin mechanics fully, and with capital you can afford to lose completely.
Get started today and join 6 million+ registered users exploring crypto investing on ZebPay!
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The information in this article is for educational purposes only and does not constitute financial or investment advice.