What Is the Primary Risk Associated with Trading Perpetual Futures Contracts?

The primary risk is the high potential for liquidation due to the use of leverage. Perpetual futures allow traders to open large positions with a small amount of collateral, the margin.

If the market moves against the leveraged position, the margin can be quickly depleted. When the margin falls below the maintenance level, the exchange automatically closes the position, resulting in a total loss of the initial margin.