How an up or down window is settled
An up or down market asks one question about a fixed stretch of time: did the price finish above where it started. The trade is simple and the settlement is not the price on your chart, which is where almost every misunderstanding about these markets begins.
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The shape of the contract
A window opens, a reference price is recorded, the window runs for a fixed length, and a second reference is recorded at the close. If the closing reference is above the opening one the market resolves Up, and the Up side pays. If it is below, the Down side pays. There is nothing to hold beyond the window, no leverage to set and no liquidation: the stake is posted at entry and it is the whole of the risk.
Windows run on the clock, not on your entry
These are epoch markets. The window boundaries are fixed in advance and shared by everyone in it, so entering with thirty seconds left is a different trade from entering at the open even though it is the same market. The consequence is that the value of the contract moves as the window runs down: a lead that would have been meaningless at the start becomes decisive with seconds to go, and the price of each side reflects that.
The number that decides it
Settlement runs on a Chainlink time-weighted average price stream, not on a single spot print. A five minute window settles against a thirty second lookback, meaning the average of the stream over the last thirty seconds of the window. A fifteen minute window settles against a sixty second lookback. Averaging over a lookback is what stops the outcome from being decided by one order at one instant, since moving an average requires holding the price rather than touching it.
Why spot and the settling price differ
Consider a window closing with a sharp move in the final seconds. The spot ticker shows one hundred thousand one hundred and forty, because that is the price right now. The thirty second average that settles the market might be one hundred thousand and ninety, because the first twenty five seconds of the lookback sat lower and they carry most of the weight. Dollars of difference on a market decided by any difference at all. The spot price is a useful indicator of where the average is heading and it is not the number being measured.
The tie rule
An exact tie between the opening and closing reference resolves Up. Because the settling values come from a stream with finite precision, exact ties are uncommon rather than impossible, and having the answer written down in advance is what keeps the edge case from being a dispute. If you are on the Down side, a flat window is a loss, and that asymmetry is part of the price.
What this changes about trading the close
A few consequences follow directly from the mechanism.
- A last second spike enters the average only in proportion to the time it occupies, so it moves the settlement less than it moves the chart
- The five minute window, with the shorter lookback, reacts faster to a late move than the fifteen minute one
- A narrow lead on spot is not a lead on the settlement reference, and near the boundary the two can point different ways
- There is no stop loss on a binary payoff, so position size is the only risk control available
- Whether you can exit early depends on there being someone to sell to, which thins out near the close
Frequently asked questions
- Which price actually settles the market?
- The Chainlink time-weighted average stream over the lookback ending at the close of the window: thirty seconds for a five minute window, sixty seconds for a fifteen minute one. Not the last trade, and not the spot ticker on the chart.
- Why does the chart show a different number?
- Because the chart shows the current price and the settlement uses an average of the recent past. Both are correct readings of different things, and near a boundary they can disagree by dollars.
- What happens if the price ends exactly flat?
- The market resolves Up. The rule is fixed in advance rather than decided after the fact, which is the point of stating it.
- Why do the five and fifteen minute windows use different lookbacks?
- The averaging period is scaled to the length of the contract. A thirty second average over a five minute window stays responsive to the move the market is about to be judged on. A fifteen minute window can afford a sixty second average, which is smoother and harder to influence.
- Can I close before the window ends?
- Only if someone will take the other side at a price you accept. The contract is tradable rather than locked, but liquidity near the close is thinner than at the open, so plan on holding to settlement unless you have checked otherwise.
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Perpetual futures are leveraged instruments and can lose more than your initial margin. Nothing on this page is investment advice.