A perpetual position is a directional bet expressed through one of two sides, long or short. Everything layered on top of that choice, size, margin, leverage, is secondary to the basic direction taken first, and the two sides are mirror images of each other in almost every respect.
A long position gains as price rises and loses as price falls, the same payoff direction as owning the underlying asset outright, achieved through margin instead of full ownership. As a simple illustration, a $10,000 notional long position gains roughly $500 before fees and funding if the underlying price rises 5%, and loses roughly the same amount if price falls 5%, regardless of how much margin was posted to open it. A long perpetual position generally pays funding when the market sits in the contango-like state described in basis trading on perps , because sustained long demand across the market shows up as a positive funding rate.
A short position is the mirror image: it gains as price falls and loses as price rises, without the trader ever holding or borrowing the underlying asset directly, since a perpetual is a synthetic exposure settled against the index. The same illustrative $10,000 notional position, if opened short, loses roughly $500 on a 5% rise and gains roughly $500 on a 5% fall, again before fees and funding. A short position generally receives funding when the market is paying longs, the negative-funding state.
On paper, the profit-and-loss curves of a long and a short position of equal notional are mirror images: one gains exactly what the other loses for a given price move. In practice that symmetry breaks down once leverage and liquidation enter the picture: a long position can only ever lose its full margin if price falls to zero, a mathematical floor, while a short position faces no equivalent ceiling, since there is no upper bound on how far price can rise. Most venues manage this asymmetry through their liquidation and margin design, but the underlying payoff shape itself is not perfectly symmetric between the two sides the way it might first appear, and it is one reason margin requirements on some venues differ slightly between the long and the short side of the same market.
This is also why the maintenance margin requirement, and the resulting liquidation trigger, exists in the first place on both sides: it forces a position to close automatically once losses reach a defined threshold, well before margin could theoretically be exceeded. Without that mechanism, a venue offering leverage on a short position with no upper price bound would have no reliable way to guarantee that a trader's loss stays capped at their posted collateral, which is why liquidation logic is treated as a core part of the position type itself.
Every position also carries a notional size and a margin amount behind it; how those two combine into a leverage ratio, and how that ratio sets the liquidation distance, is covered in leverage ratios on perps .
Flat simply means no open position. A trader can also hold offsetting long and short exposure across related instruments to hedge instead of to speculate. A common example is holding a spot asset and opening a short perpetual of equal notional against it, which neutralizes directional price risk while keeping the underlying asset itself in place, useful for a holder who wants to remove short-term price risk without actually selling. A treasury or a market maker can use the same structure the other way, holding a short spot or delivery obligation and opening a long perpetual to offset it. In both cases, what matters for risk is the net exposure across every open position taken together, regardless of the count of individual positions held; two offsetting positions of equal size produce close to zero net directional risk even though two separate positions are technically open. A hedge built this way is rarely perfectly static either: as the spot holding's value moves, the perpetual leg may need to be resized to keep the notional matched, since a hedge sized correctly at the outset can drift out of balance purely from price movement on the spot side.
The choice between long and short follows directly from a view on price direction, but the size of that view, expressed through notional and leverage, and the reference price it will be marked against, covered in mark price versus index price , are what actually determine the risk carried once the position is open. Direction is the first decision; everything else built on top of it, sizing, leverage, margin mode, is what turns that decision into a specific, sized position with a defined and knowable risk before it is ever placed. Two traders who share the exact same view on where price is heading can still end up with very different outcomes from the same call, simply because one sized the position conservatively and the other did not, which is why direction alone is rarely a complete description of a trade.
A long position on a perpetual profits when the underlying asset's price rises and loses when it falls, matching the payoff of owning the asset but achieved through posted margin. A long position typically pays funding when the market is in a contango-like state, where positive funding reflects crowded long demand.
A short position on a perpetual profits when the underlying asset's price falls and loses when it rises, without the trader ever holding or borrowing the asset directly, since settlement runs against the index price. A short position typically receives funding when the market is paying longs.
Position structure refers to how a perpetual position is built once a direction is chosen: the notional size taken, the margin posted against it, and the resulting leverage ratio and liquidation distance. The same long-or-short choice can produce very different risk depending entirely on how that structure is sized.
Perpetual markets for stocks, gold, indices and pre-IPO names — settled on-chain, no wallet-to-exchange transfers.
