What are perpetual futures and how do they work in the world of cryptocurrency?
DFCZ love_uDec 26, 2021 · 3 years ago1 answers
Can you explain what perpetual futures are and how they function in the cryptocurrency world? I'm curious to know more about their purpose and how they differ from traditional futures contracts.
1 answers
- Dec 26, 2021 · 3 years agoPerpetual futures are a popular trading instrument in the cryptocurrency market. They are similar to traditional futures contracts but with some key differences. Unlike traditional futures contracts, perpetual futures do not have an expiration date. This means that traders can hold onto their positions indefinitely. Perpetual futures are designed to closely track the price of the underlying asset through a funding mechanism. This mechanism ensures that the price of the perpetual futures contract stays in line with the spot price of the underlying asset. Traders can profit from both upward and downward price movements by going long or short on perpetual futures. However, it's important to note that trading perpetual futures involves high leverage, which can amplify both profits and losses.
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