-
Bitcoin
$94,996.6188
-1.53% -
Ethereum
$3,297.6564
-1.90% -
Tether USDt
$0.9991
-0.01% -
XRP
$2.1791
-2.99% -
BNB
$664.8724
0.28% -
Solana
$182.5012
-1.32% -
Dogecoin
$0.3116
-1.56% -
USDC
$1.0000
-0.01% -
Cardano
$0.8869
-1.67% -
TRON
$0.2475
0.25% -
Avalanche
$36.3143
-4.47% -
Chainlink
$22.6119
1.55% -
Toncoin
$5.4172
0.87% -
Shiba Inu
$0.0000
-0.93% -
Sui
$4.2542
-5.43% -
Stellar
$0.3544
-1.25% -
Polkadot
$6.8738
-2.91% -
Hedera
$0.2675
4.15% -
Bitcoin Cash
$441.6532
-2.64% -
UNUS SED LEO
$9.3846
0.96% -
Uniswap
$13.9240
1.15% -
Litecoin
$101.6450
0.62% -
Pepe
$0.0000
1.58% -
Hyperliquid
$27.6867
-17.39% -
NEAR Protocol
$5.0887
1.08% -
Ethena USDe
$0.9994
-0.01% -
Bitget Token
$4.1036
-1.38% -
Dai
$1.0000
0.00% -
Aptos
$9.1700
-3.65% -
Aave
$333.2300
10.26%
What are perpetual contracts?
Perpetual contracts provide traders flexibility to speculate on cryptocurrency price movements indefinitely, allowing them to profit from long-term trends or hedge against price fluctuations.
Dec 13, 2024 at 11:12 pm
What are Perpetual Contracts?
Perpetual contracts, also known as perpetual futures or inverse swaps, are a type of crypto derivative that allows traders to speculate on the future price of an underlying asset, such as Bitcoin, Ethereum, or other cryptocurrencies. Unlike traditional futures contracts, which have a fixed expiration date, perpetual contracts do not expire. This means that traders can hold positions indefinitely, allowing them to profit from long-term price movements or to hedge against future price fluctuations.
Key Features of Perpetual Contracts
- No Expiration Date: Perpetual contracts provide traders with the flexibility to hold positions indefinitely, allowing them to profit from long-term price trends or to hedge their portfolios against future price movements.
- Leverage: Perpetual contracts are typically traded with high leverage, allowing traders to amplify their gains or losses. However, it's important to note that leverage can also magnify potential risks.
- Funding Rate: Perpetual contracts use a funding rate mechanism to ensure that the futures price remains aligned with the spot price. The funding rate is paid by traders who are in a long or short position, depending on the market conditions.
- Liquidation: If a trader's margin falls below a certain threshold, their position may be liquidated to prevent further losses. Liquidation occurs when the market price moves against the trader's position, causing their margin to be depleted.
How do Perpetual Contracts Work?
- Trading Mechanism: Perpetual contracts are traded on cryptocurrency exchanges, similar to spot markets. Traders can open long or short positions based on their market outlook.
- Funding Rate: The funding rate is calculated and paid on a regular basis, typically every 8 hours. If the majority of traders are in a long position, the funding rate becomes positive, and short sellers pay long sellers. Conversely, if the majority of traders are in a short position, the funding rate becomes negative, and long sellers pay short sellers.
- Mark Price: The mark price is a reference price that represents the fair value of the underlying asset based on the market data from various exchanges. It is used to calculate the funding rate and to determine liquidation levels.
- Margin Requirements: Perpetual contracts are traded with leverage, which means that traders are required to maintain a certain amount of margin (collateral) to cover potential losses. The margin requirement varies depending on the exchange and the leverage used.
Benefits of Perpetual Contracts
- Speculation on Price Movements: Perpetual contracts allow traders to speculate on the future price of cryptocurrencies, providing opportunities for both short-term and long-term profits.
- Hedging Risk: Perpetual contracts can be used to hedge against potential price fluctuations in the underlying asset, protecting investors from unexpected losses.
- Flexibility: The lack of an expiration date provides traders with the flexibility to hold positions for an indefinite period, allowing for tailored trading strategies.
- Leverage: Leverage allows traders to magnify their potential gains, but it also increases the risk of losses.
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.
-
Yeti Ouro Might Be an Even Better Bet to Hit the $1 Landmark, Some Analysts Believe
- 2024-12-23 17:05:01
-
Asia's MicroStrategy Metaplanet Adds $60M Worth of BTC to Holdings
- 2024-12-23 17:25:02
-
Optimism Price Crashes: Is INF Going To Be The New Layer-2 Leader?
- 2024-12-23 17:05:01
-
Top 6 Next Crypto to Explode: Get Ready to Profit From the Market Surge
- 2024-12-23 16:45:01
-
Bitcoin (BTC) Price Analysis for December 22, 2024: BTCUSDT Maintains the Long Term Bullish Momentum
- 2024-12-23 17:25:02
-
Qubetics, Polkadot, and Helium: The Best Altcoins to Buy and Hold for Short Term Gains
- 2024-12-23 16:35:01
Related knowledge
What are the impacts of different contract leverage multiples?
Dec 16,2024 at 12:46pm
Impacts of Different Contract Leverage MultiplesLeverage, a tool leveraged in the financial realm, amplifies trading activities and enhances potential returns while simultaneously magnifying risks. Understanding the implications of varying leverage multiples is paramount for savvy traders. This article delves into the impacts of different contract lever...
Which is more suitable for novices, contract trading or margin trading on Huobi.com?
Dec 16,2024 at 12:44pm
Which is More Suitable for Novices: Contract Trading or Margin Trading on Huobi.com?As a novice trader venturing into the world of cryptocurrency trading, the choice between contract trading and margin trading on Huobi.com can be a daunting one. Both instruments offer unique advantages and drawbacks, making it crucial to understand their key differences...
What does the leverage ratio of contract trading mean?
Dec 16,2024 at 12:43pm
What does the leverage ratio of contract trading mean?IntroductionLeverage ratio is a key concept in contract trading, allowing traders to gain exposure to a larger position than their initial capital would allow. This can potentially amplify both profits and losses, making it crucial for traders to understand its implications.Understanding Leverage Rat...
What scams exist in leveraged trading of virtual currency contracts?
Dec 16,2024 at 12:42pm
What Scams Exist in Leveraged Trading of Virtual Currency Contracts?Leveraged trading of virtual currency contracts, also known as margin trading, can be a lucrative way to increase your profits. However, it is important to be aware of the various scams that exist in this market so that you can protect yourself from losing your money.Pump-and-dump scams...
What is 20x leverage on Bitcoin contracts?
Dec 16,2024 at 12:40pm
What is 20x Leverage on Bitcoin Contracts?IntroductionLeverage is a powerful tool in the world of trading that can magnify both profits and losses. However, it's essential to understand the risks involved before using leverage, especially when trading volatile assets like Bitcoin. In this comprehensive guide, we will delve into the concept of 20x levera...
What is the difference between Huobi’s margin trading and contract trading?
Dec 16,2024 at 12:39pm
Understanding the Distinctions between Huobi Margin Trading and Contract TradingIntroductionHuobi, a leading cryptocurrency exchange, offers diverse trading options to cater to traders' varying risk tolerance and investment goals. Among these options are Margin Trading and Contract Trading, each with distinct features and trading mechanisms. This compre...
What are the impacts of different contract leverage multiples?
Dec 16,2024 at 12:46pm
Impacts of Different Contract Leverage MultiplesLeverage, a tool leveraged in the financial realm, amplifies trading activities and enhances potential returns while simultaneously magnifying risks. Understanding the implications of varying leverage multiples is paramount for savvy traders. This article delves into the impacts of different contract lever...
Which is more suitable for novices, contract trading or margin trading on Huobi.com?
Dec 16,2024 at 12:44pm
Which is More Suitable for Novices: Contract Trading or Margin Trading on Huobi.com?As a novice trader venturing into the world of cryptocurrency trading, the choice between contract trading and margin trading on Huobi.com can be a daunting one. Both instruments offer unique advantages and drawbacks, making it crucial to understand their key differences...
What does the leverage ratio of contract trading mean?
Dec 16,2024 at 12:43pm
What does the leverage ratio of contract trading mean?IntroductionLeverage ratio is a key concept in contract trading, allowing traders to gain exposure to a larger position than their initial capital would allow. This can potentially amplify both profits and losses, making it crucial for traders to understand its implications.Understanding Leverage Rat...
What scams exist in leveraged trading of virtual currency contracts?
Dec 16,2024 at 12:42pm
What Scams Exist in Leveraged Trading of Virtual Currency Contracts?Leveraged trading of virtual currency contracts, also known as margin trading, can be a lucrative way to increase your profits. However, it is important to be aware of the various scams that exist in this market so that you can protect yourself from losing your money.Pump-and-dump scams...
What is 20x leverage on Bitcoin contracts?
Dec 16,2024 at 12:40pm
What is 20x Leverage on Bitcoin Contracts?IntroductionLeverage is a powerful tool in the world of trading that can magnify both profits and losses. However, it's essential to understand the risks involved before using leverage, especially when trading volatile assets like Bitcoin. In this comprehensive guide, we will delve into the concept of 20x levera...
What is the difference between Huobi’s margin trading and contract trading?
Dec 16,2024 at 12:39pm
Understanding the Distinctions between Huobi Margin Trading and Contract TradingIntroductionHuobi, a leading cryptocurrency exchange, offers diverse trading options to cater to traders' varying risk tolerance and investment goals. Among these options are Margin Trading and Contract Trading, each with distinct features and trading mechanisms. This compre...
See all articles