How to trade perpetual contracts on Bybit?

Bybit’s perpetual contracts let you trade crypto like BTC and ETH without expiry dates, using funding rates to stay aligned with spot prices—ideal for both short- and long-term strategies. (154 characters)

Jul 29, 2025 at 06:35 pm

Understanding Perpetual Contracts on Bybit

Perpetual contracts are derivative products that allow traders to speculate on the price of an asset without owning it. Unlike traditional futures, they have no expiry date, making them ideal for long-term or short-term strategies. On Bybit, perpetual contracts are available for major cryptocurrencies like BTC, ETH, and SOL, and they use a funding rate mechanism to keep the contract price aligned with the spot market. This funding rate is exchanged between long and short positions every 8 hours and is crucial to understand before opening a trade.

Setting Up Your Bybit Account

Before trading, ensure your Bybit account is verified. Navigate to the "Profile" section and complete KYC if needed. Deposit funds into your "Contract Wallet"—not your spot wallet. This separation is critical because perpetual contracts use isolated margin systems. Once funds are in the contract wallet, you’re ready to begin. Always check the network compatibility when depositing USDT or other assets to avoid losing funds due to incorrect chain selection.

Navigating the Perpetual Contracts Interface

Go to the "Derivatives" tab on Bybit’s homepage and select “USDT Perpetual” or “Inverse Perpetual.” USDT contracts are more beginner-friendly because they’re quoted in stablecoin terms. The interface displays key metrics like mark price, last price, 24h change, and open interest. Pay attention to the "Mark Price", which prevents manipulation and is used for liquidation calculations. The order book and depth chart on the right help assess market sentiment and liquidity.

Placing Your First Perpetual Contract Trade

• Select the contract (e.g., BTCUSDT)
• Choose "Isolated" or "Cross" margin mode—Isolated limits risk to the allocated margin, while Cross uses your entire wallet balance
• Set your leverage using the slider—start with 5x or 10x for safety
• Enter the contract size (in USD or number of contracts)
• Select order type: Limit, Market, or Conditional (Stop-Limit/Stop-Market)
• Review the liquidation price displayed—it must be far from your entry to avoid premature liquidation
• Click “Buy Long” or “Sell Short” to execute
  

  Always double-check the “Order Preview” box before confirming. It shows your entry price, estimated liquidation, and margin used.

  Managing Risk and Monitoring Positions

  
  Once a position is open, monitor it under the “Positions” tab. Key elements include:
• Unrealized PnL: Shows profit or loss based on current mark price
• Leverage and Margin: Adjust leverage without closing the trade (only in Isolated mode)
• Take Profit and Stop Loss: Set these immediately after entry to automate exits
• Funding Rate Timer: Check when the next payment occurs—being long during positive funding means you pay, short means you earn
  

  To reduce exposure, you can partially close a position by entering a smaller size in the opposite direction. For example, if you’re long 1 BTC, selling 0.5 BTC closes half the position.

  Understanding Funding Rates and Liquidation

  
  Funding rates are displayed at the top of the trading interface. If it’s positive, longs pay shorts; if negative, shorts pay longs. These payments occur at 00:00, 08:00, and 16:00 UTC. Liquidation happens when your equity drops to zero. Bybit uses an insurance fund to cover losses if the position isn’t auto-deleveraged. Always keep your maintenance margin above the threshold shown in the position panel to avoid liquidation.
  

  FAQs

  What is the difference between USDT and Inverse perpetual contracts on Bybit?
  
  USDT contracts are quoted in USDT and are easier for beginners. Inverse contracts are quoted in the base asset (e.g., BTCUSD) and require more precise risk management due to volatility in the collateral asset.

  Can I change my leverage after opening a position?
  
  Yes, but only in Isolated margin mode. Go to the “Positions” tab, click the leverage icon next to your open position, and adjust it. Cross margin does not allow per-position leverage changes.

  How do I avoid liquidation on Bybit?
  
  Maintain a healthy distance between your entry price and liquidation price. Use lower leverage, set stop-loss orders, and monitor funding rates to avoid unexpected margin erosion.

  What happens if my position gets liquidated?
  
  Bybit will automatically close your position at the bankruptcy price. If the insurance fund covers the loss, you lose only your initial margin. If not, auto-deleveraging (ADL) may occur, where opposing traders are forcibly closed to cover the deficit.