Are there any specific risks associated with trading perpetual futures contracts in the cryptocurrency market compared to standard futures contracts?

5 answers

• Sutton RossiSep 26, 2021 · 4 years ago
  Trading perpetual futures contracts in the cryptocurrency market can be more risky compared to standard futures contracts due to the unique characteristics of these contracts. One specific risk is the possibility of liquidation. Perpetual futures contracts have no expiration date, which means that traders can hold their positions indefinitely. However, if the price of the underlying cryptocurrency moves against a trader's position, the contract may be liquidated, resulting in a loss. This risk is especially pronounced in volatile markets, where price movements can be rapid and unpredictable.
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• Qiang LiJun 03, 2025 · 3 months ago
  Another risk associated with trading perpetual futures contracts is the funding rate. Perpetual futures contracts use a funding mechanism to ensure that the contract price closely tracks the spot price of the underlying cryptocurrency. This funding rate is periodically exchanged between long and short positions. However, if the funding rate is high, traders holding a losing position may have to pay a significant amount of funding fees, which can eat into their profits or increase their losses.
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• Strickland StormNov 23, 2023 · 2 years ago
  From BYDFi's perspective, trading perpetual futures contracts in the cryptocurrency market compared to standard futures contracts has its own set of risks. While perpetual futures contracts offer the advantage of being able to hold positions indefinitely, they also come with the risk of liquidation and funding fees. Traders should carefully consider these risks and manage their positions accordingly to avoid significant losses.
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• Cochrane OddershedeApr 03, 2021 · 4 years ago
  When trading perpetual futures contracts in the cryptocurrency market, it is important to closely monitor the market and set appropriate stop-loss orders to limit potential losses. Additionally, traders should be aware of the potential for market manipulation, as the cryptocurrency market is still relatively unregulated compared to traditional financial markets. It is advisable to conduct thorough research and analysis before entering into any trading positions.
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• Book N DriveJan 15, 2023 · 3 years ago
  In summary, trading perpetual futures contracts in the cryptocurrency market compared to standard futures contracts carries specific risks such as liquidation, funding fees, market manipulation, and the need for constant monitoring. Traders should carefully assess these risks and develop a comprehensive risk management strategy to protect their investments.
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