Learn order types, leverage, funding rates, liquidation, and risk management for perpetual futures trading on Aster DEX.
Educational content only. Not financial advice. Perpetual futures carry extreme risk of loss.
Risk Disclaimer
Perpetual futures trading involves substantial risk of loss. Leveraged positions can be liquidated rapidly. Only trade with funds you can afford to lose entirely. This guide is for educational purposes and does not constitute financial advice.
Understanding order types is the foundation of trading. Each serves a different purpose in your strategy.
Executes immediately at the best available price. Your order is filled against existing orders in the order book.
When to use: When you need to enter or exit a position quickly and price precision is less important than execution speed.
Sets a specific price at which you want to buy or sell. The order only fills when the market reaches your price.
When to use: When you want to enter at a specific price level, or you're willing to wait for a better entry.
Automatically closes your position when the price hits a specified level, limiting your downside risk.
When to use: On every trade. A stop-loss is your primary defense against catastrophic losses.
Automatically closes your position at a target price level, locking in gains when the market moves in your favor.
When to use: When you have a clear profit target and want to secure gains without watching the chart constantly.
Leverage amplifies both gains and losses. Aster offers up to 300x leverage, but higher leverage means a smaller price move can liquidate your position.
The collateral required to open a position. At 10x leverage, you need 10% of the position size as initial margin. At 100x, you need just 1%.
The minimum collateral you must maintain to keep your position open. If your margin drops below this level due to unrealized losses, liquidation is triggered.
Key insight: Higher leverage does not increase your profit per dollar of margin -- it reduces the margin required. The risk is that smaller adverse moves liquidate your position. A 1% move against a 100x position wipes out your margin entirely.
Funding rates are periodic payments between long and short traders that keep perpetual contract prices anchored to the spot market price.
On Aster, funding rates are settled every 8 hours. Payments occur automatically if you hold a position at the settlement time.
When the funding rate is positive, the perp price is above spot. Longs pay shorts. This incentivizes short selling to bring the price down.
When the funding rate is negative, the perp price is below spot. Shorts pay longs. This incentivizes buying to push the price up.
Cost or income: Funding payments are proportional to your position size, not your margin. A $10,000 position at 0.01% funding rate costs $1 per 8-hour interval. Over a day (3 intervals), that's $3.
Compounding effect: During trending markets, funding rates can become extremely high (0.1%+ per interval). For leveraged positions held over days, funding payments can significantly erode profits or accelerate losses.
Strategy consideration: Some traders collect funding by taking the unpopular side of the market. During bullish sentiment (positive rates), shorting can earn funding income -- but carries directional risk.
Liquidation is the forced closing of your position when your margin can no longer sustain the losses. Understanding it is critical to survival.
Liquidation occurs when your position's unrealized losses cause your remaining margin to fall below the maintenance margin requirement. The mark price (a fair price derived from the index and order book) is used to calculate your margin ratio.
Margin Ratio = Remaining Margin / Position Value
If Margin Ratio < Maintenance Margin Rate → Liquidation
Before full liquidation, the system may partially reduce your position size. This lowers the margin requirement and can bring your margin ratio back above the maintenance level.
If partial liquidation is insufficient or the price move is too severe, the entire position is closed. Your initial margin for that position is lost.
Use lower leverage. 5x-10x gives meaningful exposure with comfortable liquidation distance.
Set stop-losses. Close positions before they reach liquidation price.
Monitor margin ratio. Keep it well above the maintenance requirement.
Add margin. Deposit additional collateral to your position if it's moving against you (only if your thesis still holds).
Use isolated margin. Limits loss to the margin allocated to each trade, protecting the rest of your account.
Reduce position size. Smaller positions relative to your account reduce liquidation risk.
Risk management is what separates traders who survive from those who blow up. These principles apply regardless of your strategy or timeframe.
Never risk more than 1-2% of your total trading capital on a single trade. This means your stop-loss, if triggered, should cost you no more than 1-2% of your account balance.
Example: $1,000 account, 2% risk = $20 max loss per trade
At 10x leverage with a 2% stop: Position size = $100
Place stop-losses at levels that invalidate your trade thesis, not at arbitrary percentages. Use key support/resistance levels, recent swing highs/lows, or technical indicators.
Avoid concentrating all your capital in a single trade or asset. Spread risk across different pairs and ensure your positions are not all correlated (e.g., BTC and ETH tend to move together). If all your positions are in the same direction on correlated assets, you effectively have one large bet.
The most common reason traders lose money is emotional decision-making. Revenge trading after a loss, FOMO entries, and refusing to cut losses are all symptoms of poor emotional control.
Instead of entering a full position at once, consider scaling in across multiple price levels. This reduces the impact of poor timing and averages your entry price. Only DCA into a position if the original thesis remains valid -- never DCA into a losing trade just to lower your average without reassessing why the trade is moving against you.
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All content on this website is for educational and entertainment purposes only. Nothing here constitutes financial, investment, trading, accounting, tax, or legal advice.
Perpetual futures are highly speculative and may result in substantial or total loss of capital. Leverage amplifies gains and losses. Trade only with money you can afford to lose. Always do your own research and consider seeking advice from a qualified professional.
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