What are perpetual contracts on KuCoin?

Understanding Perpetual Contracts on KuCoin

Perpetual contracts on KuCoin are derivative financial instruments that allow traders to speculate on the price of cryptocurrencies without owning the underlying asset. Unlike traditional futures, they have no expiry date, enabling traders to hold positions indefinitely. This makes them especially popular among both short-term and long-term traders. The key mechanism that keeps the contract price close to the spot price is the funding rate, which is exchanged between long and short positions at regular intervals—typically every 8 hours on KuCoin.

How Leverage Works in KuCoin Perpetual Contracts

Leverage allows traders to open positions larger than their available margin. KuCoin offers leverage options ranging from 1x to 100x, depending on the asset and the risk level the trader selects. For example, with 10x leverage, a trader can control a $1,000 position with only $100 of their own funds. However, higher leverage increases both potential gains and losses. Traders must understand that leverage magnifies risk, and if the market moves against them, they may face liquidation. KuCoin provides a liquidation calculator in the trading interface to help users estimate their risk exposure.

• Select the leverage level from the dropdown menu on the trading screen
• Confirm the initial margin requirement based on the selected leverage
• Monitor the maintenance margin to avoid automatic liquidation

Differences Between Isolated and Cross Margin Modes

KuCoin offers two margin modes for perpetual contracts: isolated and cross. In isolated margin, the margin for a position is fixed and separate from the rest of the account balance. This means losses are limited to the allocated margin, making it ideal for risk management. In contrast, cross margin uses the entire account balance as collateral, which can reduce the chance of liquidation but exposes more funds to risk.

• Isolated margin: Set a specific amount of margin for each trade; risk is capped
• Cross margin: Entire balance acts as margin; higher flexibility but broader exposure
• Switch between modes directly in the trading interface before opening a position

Step-by-Step Guide to Opening a Perpetual Contract on KuCoin

Opening a perpetual contract on KuCoin is straightforward once you understand the steps. First, ensure your account has sufficient funds in the designated margin currency (USDT or BTC). Navigate to the Futures section, select the desired contract (e.g., BTC/USDT), and choose your preferred leverage and margin mode.

• Click “Futures” from the KuCoin homepage
• Choose a contract pair (e.g., ETH/USDT Perpetual)
• Set leverage using the slider or input box
• Select margin mode: isolated or cross
• Enter the order size and choose order type (market, limit, stop-market, etc.)
• Review the estimated liquidation price and click “Buy/Long” or “Sell/Short”

Each step must be confirmed carefully, especially when setting leverage and margin mode, as these settings directly affect risk exposure.

Funding Rate and Its Impact on Perpetual Positions

The funding rate is a periodic payment exchanged between long and short traders to keep the contract price aligned with the underlying spot price. On KuCoin, this rate is updated every 8 hours—at 00:00 UTC, 08:00 UTC, and 16:00 UTC. If the funding rate is positive, longs pay shorts; if negative, shorts pay longs. This mechanism prevents prolonged price divergence and ensures market efficiency.

• Check the current funding rate displayed on the contract page
• Understand that holding a position during a funding payment incurs or earns fees
• Use the funding calendar to anticipate payment times and adjust positions accordingly

Traders who hold positions long-term must factor in funding costs or earnings as part of their strategy.

Risk Management Tools on KuCoin Futures

KuCoin provides several tools to help traders manage risk in perpetual contracts. These include take-profit and stop-loss orders, which automatically close positions at predefined prices. Additionally, the platform displays real-time liquidation prices based on current market conditions and leverage. Traders can also set trailing stop orders to lock in profits while allowing room for market fluctuations.

• Set stop-loss to limit downside risk
• Use take-profit to secure gains without manual intervention
• Enable trailing stop to follow price trends dynamically
• Monitor liquidation price in the position tab to avoid unexpected closures

These tools are essential for maintaining control over open positions, especially in volatile markets.

What happens if my position gets liquidated on KuCoin?If the market price reaches your liquidation price, KuCoin automatically closes your position to prevent further losses. The system uses an insurance fund to cover any shortfall, and if the fund is insufficient, an auto-deleveraging (ADL) mechanism may reduce positions of profitable counterparties.

Can I change leverage after opening a position?Yes, you can adjust leverage at any time before the position is closed. However, changing leverage affects your margin and liquidation price. KuCoin allows this adjustment in the position tab without closing the trade.

Is there a fee for opening or closing perpetual contracts on KuCoin?Yes, KuCoin charges a taker fee when you close a position using a market order and a maker fee if your order sits on the order book. These fees vary based on your 30-day trading volume and whether you hold KCS (KuCoin Shares).

How do I check my funding payments on KuCoin?Go to the “Futures” section, click “Account,” then “Funding Records.” Here, you’ll see a detailed log of all funding payments received or paid for each position, including timestamps and amounts.