How does bitcoin perpetual futures differ from traditional futures trading?

3 answers

• Jennell SzambJan 17, 2021 · 5 years ago
  Bitcoin perpetual futures and traditional futures trading have several key differences. Firstly, bitcoin perpetual futures contracts do not have an expiration date, while traditional futures contracts have a fixed expiration date. This means that bitcoin perpetual futures can be held indefinitely, allowing traders to maintain their positions for as long as they want. On the other hand, traditional futures contracts require traders to close their positions before the expiration date, which can limit their trading strategies. Another difference is the funding mechanism. Bitcoin perpetual futures use a funding rate to ensure that the contract price stays close to the spot price. This funding rate is exchanged between long and short positions every 8 hours. In contrast, traditional futures contracts rely on a settlement process, where the difference between the contract price and the spot price is settled at the expiration date. Additionally, bitcoin perpetual futures often have higher leverage options compared to traditional futures trading. This allows traders to amplify their potential profits or losses. However, it's important to note that higher leverage also increases the risk involved in trading. Overall, bitcoin perpetual futures offer more flexibility in terms of expiration dates, utilize a funding mechanism to maintain price stability, and provide higher leverage options compared to traditional futures trading.
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• ritzcrackersMay 21, 2022 · 3 years ago
  Bitcoin perpetual futures and traditional futures trading are different in a few ways. Firstly, bitcoin perpetual futures do not have an expiration date, while traditional futures contracts have a fixed expiration date. This means that bitcoin perpetual futures can be held indefinitely, allowing traders to have more flexibility in managing their positions. On the other hand, traditional futures contracts have to be closed before the expiration date. Another difference is the funding mechanism. Bitcoin perpetual futures use a funding rate to ensure that the contract price closely tracks the spot price. This funding rate is exchanged between long and short positions every 8 hours. In contrast, traditional futures contracts rely on a settlement process at the expiration date to settle the difference between the contract price and the spot price. Moreover, bitcoin perpetual futures often offer higher leverage options compared to traditional futures trading. This means that traders can potentially amplify their profits or losses. However, it's important to be aware that higher leverage also increases the risk involved in trading. In summary, bitcoin perpetual futures provide more flexibility in terms of expiration dates, utilize a funding mechanism to maintain price stability, and offer higher leverage options compared to traditional futures trading.
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• Alexander BelovJun 17, 2022 · 3 years ago
  Bitcoin perpetual futures and traditional futures trading have some notable differences. Firstly, bitcoin perpetual futures do not have an expiration date, while traditional futures contracts have a fixed expiration date. This means that bitcoin perpetual futures can be held indefinitely, allowing traders to keep their positions open for as long as they want. In contrast, traditional futures contracts require traders to close their positions before the expiration date. Another difference is the funding mechanism. Bitcoin perpetual futures use a funding rate to ensure that the contract price closely tracks the spot price. This funding rate is exchanged between long and short positions every 8 hours. On the other hand, traditional futures contracts rely on a settlement process at the expiration date to settle the difference between the contract price and the spot price. Furthermore, bitcoin perpetual futures often offer higher leverage options compared to traditional futures trading. This allows traders to potentially amplify their profits or losses. However, it's important to understand that higher leverage also increases the risk involved in trading. In conclusion, bitcoin perpetual futures provide more flexibility in terms of expiration dates, utilize a funding mechanism to maintain price stability, and offer higher leverage options compared to traditional futures trading.
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