What are the differences between perpetual futures and traditional futures in the cryptocurrency market?

3 answers

• Flutter DeveloperNov 29, 2023 · 2 years ago
  Perpetual futures and traditional futures are both derivatives contracts that allow traders to speculate on the price movements of cryptocurrencies. However, there are some key differences between the two. Perpetual futures do not have an expiration date, unlike traditional futures which have a fixed maturity date. This means that perpetual futures can be held indefinitely as long as the trader maintains the required margin. On the other hand, traditional futures contracts have a specific expiration date, after which the contract is settled. Another difference is the funding mechanism. Perpetual futures use a funding rate to ensure that the contract's price closely tracks the underlying asset's price. This funding rate is exchanged between long and short positions in the market. In contrast, traditional futures contracts do not have a funding mechanism. In terms of trading fees, perpetual futures typically have a funding fee that is charged every few hours, while traditional futures have a one-time transaction fee. Overall, perpetual futures offer more flexibility and allow traders to hold positions for longer periods. However, they also carry the risk of funding fees and potential price divergence from the underlying asset. Traditional futures, on the other hand, have a fixed expiration date and do not have funding fees, but they may not be as flexible for long-term trading strategies.
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• Sanaz AlipoorAug 31, 2022 · 3 years ago
  Perpetual futures and traditional futures are two different types of contracts in the cryptocurrency market. Perpetual futures, also known as perpetual swaps, are designed to mimic the spot market and provide traders with the ability to trade with leverage. Traditional futures, on the other hand, are contracts that require the delivery of the underlying asset at a specified future date. One of the main differences between perpetual futures and traditional futures is the absence of an expiration date in perpetual futures. This means that traders can hold their positions indefinitely as long as they meet the margin requirements. In contrast, traditional futures have a fixed expiration date, after which the contract is settled. Another difference is the funding mechanism. Perpetual futures use a funding rate to ensure that the contract's price closely tracks the underlying asset's price. This funding rate is exchanged between long and short positions in the market. Traditional futures, on the other hand, do not have a funding mechanism. In terms of trading fees, perpetual futures typically have a funding fee that is charged every few hours, while traditional futures have a one-time transaction fee. It's important to note that both perpetual futures and traditional futures have their own advantages and disadvantages. Perpetual futures offer more flexibility and allow traders to hold positions for longer periods, but they also carry the risk of funding fees and potential price divergence from the underlying asset. Traditional futures have a fixed expiration date and do not have funding fees, but they may not be as flexible for long-term trading strategies.
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• F-BravoApr 27, 2022 · 3 years ago
  Perpetual futures and traditional futures are two types of derivatives contracts in the cryptocurrency market. Perpetual futures, also known as perpetual swaps, are contracts that do not have an expiration date. This means that traders can hold their positions indefinitely as long as they meet the margin requirements. Traditional futures, on the other hand, have a fixed expiration date, after which the contract is settled. One of the main differences between perpetual futures and traditional futures is the funding mechanism. Perpetual futures use a funding rate to ensure that the contract's price closely tracks the underlying asset's price. This funding rate is exchanged between long and short positions in the market. Traditional futures, on the other hand, do not have a funding mechanism. In terms of trading fees, perpetual futures typically have a funding fee that is charged every few hours, while traditional futures have a one-time transaction fee. Perpetual futures offer more flexibility and allow traders to hold positions for longer periods. However, they also carry the risk of funding fees and potential price divergence from the underlying asset. Traditional futures have a fixed expiration date and do not have funding fees, but they may not be as flexible for long-term trading strategies.
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