Retail investors should beware perpetual futures

July 28, 2026 - 22:33

A type of trading product once confined to the fringes of cryptocurrency is now making its way into mainstream trading platforms, and financial experts are sounding the alarm for everyday investors. Perpetual futures, a derivative that has no expiration date, allow traders to bet on the price of an asset indefinitely. Unlike traditional futures contracts that settle on a specific date, these instruments roll over automatically, but they come with a dangerous twist: a built-in funding rate that shifts costs between buyers and sellers every few hours.

The appeal is obvious. Investors can use high leverage, sometimes 100 times their actual capital, to amplify potential gains. But the risks are equally extreme. A small price move in the wrong direction can wipe out an entire position in seconds. Regulators in several countries have already flagged these products as unsuitable for most retail traders, yet they are increasingly offered by apps and platforms targeting casual investors.

Critics argue that perpetual futures are essentially gambling dressed up as sophisticated trading. The constant funding payments can drain accounts even when the market is flat, and the lack of a settlement date means there is no natural stop to losses. For someone without deep knowledge of derivatives, the complexity can be a trap. The message from analysts is blunt: if you are not a professional with a clear strategy and a high tolerance for risk, stay far away. The potential for quick money is real, but so is the potential for losing everything.