How do futures and perpetual contracts work in the context of cryptocurrency trading?
Mohamad DuckworthDec 29, 2020 · 5 years ago1 answers
Can you explain how futures and perpetual contracts work in the context of cryptocurrency trading? What are the key differences between the two?
1 answers
- Hemant DAug 27, 2022 · 3 years agoWhen it comes to cryptocurrency trading, futures and perpetual contracts are two popular options for traders to speculate on the price movements of cryptocurrencies. Futures contracts are agreements to buy or sell a specific cryptocurrency at a predetermined price and date in the future. On the other hand, perpetual contracts are similar to futures contracts but do not have an expiration date. One key difference between futures and perpetual contracts is the funding mechanism. Perpetual contracts have a funding rate that is exchanged between long and short positions to ensure the contract's price closely tracks the spot price of the underlying cryptocurrency. This funding mechanism helps maintain the contract's price stability. Another difference is the trading fees. Futures contracts often have higher trading fees compared to perpetual contracts. This is because futures contracts require the constant rolling over of positions, which incurs additional costs. In summary, futures and perpetual contracts provide traders with opportunities to profit from cryptocurrency price movements. However, it's important to carefully consider the specific features and risks associated with each instrument before engaging in trading activities.
Top Picks
How to Use Bappam TV to Watch Telugu, Tamil, and Hindi Movies?
2 158345How to Trade Options in Bitcoin ETFs as a Beginner?
1 3314Crushon AI: The Only NSFW AI Image Generator That Feels Truly Real
0 1269How to Withdraw Money from Binance to a Bank Account in the UAE?
1 0236Who Owns Microsoft in 2025?
2 1229Bitcoin Dominance Chart: Your Guide to Crypto Market Trends in 2025
0 0211
Related Tags
Hot Questions
- 2716
How can college students earn passive income through cryptocurrency?
- 2644
What are the top strategies for maximizing profits with Metawin NFT in the crypto market?
- 2474
How does ajs one stop compare to other cryptocurrency management tools in terms of features and functionality?
- 1772
How can I mine satosh and maximize my profits?
- 1442
What is the mission of the best cryptocurrency exchange?
- 1348
What factors will influence the future success of Dogecoin in the digital currency space?
- 1284
What are the best cryptocurrencies to invest $500k in?
- 1184
What are the top cryptocurrencies that are influenced by immunity bio stock?
More