What are perpetual futures and how do they work in the world of cryptocurrency?

1 answers

• Daniel CardozoFeb 14, 2024 · 2 years ago
  Perpetual 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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