What are the advantages and disadvantages of trading standard futures compared to perpetual futures in the cryptocurrency market?

3 answers

• Dec 27, 2021 · 3 years ago
  Trading standard futures in the cryptocurrency market offers several advantages. Firstly, standard futures contracts have a fixed expiration date, which allows traders to plan their positions and strategies more effectively. Additionally, standard futures often have higher liquidity compared to perpetual futures, making it easier to enter and exit positions. However, one disadvantage of standard futures is the need to roll over contracts when they expire, which can incur additional costs and administrative work. Furthermore, standard futures may have higher margin requirements compared to perpetual futures, which can limit trading opportunities for some traders.
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• Dec 27, 2021 · 3 years ago
  Perpetual futures, on the other hand, have their own advantages and disadvantages. One major advantage is that perpetual futures do not have an expiration date, allowing traders to hold positions indefinitely. This can be beneficial for traders who want to avoid the hassle of rolling over contracts. Moreover, perpetual futures often have lower margin requirements, which can provide more flexibility for traders with limited capital. However, perpetual futures may have lower liquidity compared to standard futures, which can result in wider bid-ask spreads and slippage. Additionally, the lack of an expiration date in perpetual futures can also introduce the risk of funding fees, which are used to maintain the price peg of the contract to the underlying asset.
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• Dec 27, 2021 · 3 years ago
  From BYDFi's perspective, trading standard futures and perpetual futures both have their own unique advantages and disadvantages. Standard futures offer more predictable trading conditions with fixed expiration dates, while perpetual futures provide more flexibility with no expiration date. Traders should consider their own trading goals, risk tolerance, and market conditions when deciding which type of futures contract to trade. It's important to thoroughly understand the characteristics and risks associated with each type of contract before engaging in futures trading.
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