What are the advantages and disadvantages of trading perpetual contracts compared to futures in the cryptocurrency industry?

3 answers

• cjfiore94Feb 24, 2021 · 4 years ago
  Trading perpetual contracts in the cryptocurrency industry offers several advantages. Firstly, perpetual contracts do not have an expiration date, allowing traders to hold positions indefinitely. This provides flexibility and eliminates the need to roll over contracts. Additionally, perpetual contracts often have higher liquidity compared to futures, making it easier to enter and exit positions. However, perpetual contracts also come with risks. Due to their nature, they are susceptible to funding rates, which can lead to additional costs for traders. Furthermore, the absence of an expiration date means that traders need to closely monitor their positions to avoid potential losses. Overall, perpetual contracts offer flexibility and liquidity, but traders should be aware of the associated risks.
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• Caroline Mella CrippaJun 07, 2024 · a year ago
  When it comes to trading perpetual contracts versus futures in the cryptocurrency industry, there are pros and cons to consider. On the positive side, perpetual contracts offer continuous trading without the need for contract expiration and rollovers. This can be advantageous for traders who want to hold positions for an extended period. Additionally, perpetual contracts often have higher trading volumes and tighter spreads, providing better liquidity and potentially lower trading costs. However, perpetual contracts also have their drawbacks. The absence of an expiration date means that traders are exposed to funding costs, which can eat into profits. Moreover, the perpetual nature of these contracts requires constant monitoring to avoid potential losses. It's important for traders to carefully weigh the advantages and disadvantages before deciding which type of trading instrument suits their needs.
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• Dmitry DudarenkoApr 25, 2024 · a year ago
  Trading perpetual contracts compared to futures in the cryptocurrency industry has its own set of advantages and disadvantages. Perpetual contracts, like those offered by BYDFi, provide traders with the ability to trade without worrying about contract expiration dates. This allows for greater flexibility and the ability to hold positions for as long as desired. Additionally, perpetual contracts often have higher liquidity, making it easier to enter and exit positions. However, traders should be aware of the funding rates associated with perpetual contracts, as they can impact overall profitability. It's important to carefully consider these factors and conduct thorough research before deciding which type of trading instrument to use in the cryptocurrency industry.
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