How does Binance's perpetual futures market work?

3 answers

• Turin NandoSep 24, 2021 · 4 years ago
  Binance's perpetual futures market is a type of derivative contract that allows traders to speculate on the price of cryptocurrencies without owning the underlying asset. Unlike traditional futures contracts, perpetual futures contracts do not have an expiration date. Instead, they are designed to track the price of the underlying asset by using a funding mechanism. In Binance's perpetual futures market, traders can go long (buy) or short (sell) positions. Long positions profit when the price of the cryptocurrency increases, while short positions profit when the price decreases. Traders can use leverage to amplify their potential profits or losses. To ensure that the perpetual futures market closely tracks the spot market price, a funding mechanism is used. This mechanism periodically adjusts the funding rate, which is paid by one side of the market to the other. If the funding rate is positive, long positions pay short positions, and vice versa. This helps to prevent large price discrepancies between the perpetual futures market and the spot market. Overall, Binance's perpetual futures market provides traders with the opportunity to profit from both rising and falling cryptocurrency prices, while also allowing them to use leverage to potentially increase their gains or losses.
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• Daniel MilianowskiJun 01, 2022 · 3 years ago
  Binance's perpetual futures market is a unique trading platform that allows users to speculate on the price of cryptocurrencies without actually owning them. This type of trading is known as derivatives trading. Unlike traditional futures contracts, perpetual futures contracts do not have an expiration date, which means that traders can hold their positions indefinitely. In Binance's perpetual futures market, traders can go long or short on various cryptocurrencies. Going long means buying a contract in the hopes that the price of the cryptocurrency will increase, while going short means selling a contract in the hopes that the price will decrease. One of the key features of Binance's perpetual futures market is the funding mechanism. This mechanism helps to keep the price of the perpetual futures contract in line with the spot market price. It achieves this by periodically adjusting the funding rate, which is paid by one side of the market to the other. If the funding rate is positive, long positions pay short positions, and vice versa. Overall, Binance's perpetual futures market offers traders the opportunity to profit from the volatility of cryptocurrency prices without actually owning the underlying assets. It also provides the flexibility of trading with leverage, allowing traders to amplify their potential gains or losses.
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• Hurst BergOct 10, 2024 · 9 months ago
  In Binance's perpetual futures market, traders can speculate on the price of cryptocurrencies without owning the actual assets. This type of trading is popular among cryptocurrency enthusiasts who want to profit from the price movements of various digital currencies. Unlike traditional futures contracts, perpetual futures contracts do not have an expiration date. This means that traders can hold their positions for as long as they want. They can go long (buy) if they believe the price of a cryptocurrency will increase, or go short (sell) if they believe the price will decrease. To ensure that the perpetual futures market closely tracks the spot market price, Binance uses a funding mechanism. This mechanism adjusts the funding rate periodically, which is paid by one side of the market to the other. If the funding rate is positive, long positions pay short positions, and vice versa. Overall, Binance's perpetual futures market provides traders with the opportunity to profit from the price movements of cryptocurrencies without actually owning them. It also offers the flexibility of trading with leverage, allowing traders to potentially amplify their gains or losses.
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