Perpetual Contracts
| Perpetual contracts are derivatives that are similar to futures contracts but don’t have an expiration date. This means that they can be held indefinitely and can be used to hedge against future price movements in the underlying asset. Perpetual contracts are popular among traders who want to take a long-term view on the market, as they can be held indefinitely and don’t have the time pressure of expiring contracts. They can also be used as a tool for speculation, as traders can take a view on the future price of the underlying asset and profit from price movements. Perpetual contracts are traded on margin, meaning that traders only need to put up a small percentage of the total value of the contract. This allows for leverage, which can magnify profits or losses. Perpetual contracts are a type of derivative, which means that their value is derived from the underlying asset. In this case, the underlying asset is usually a cryptocurrency, such as Bitcoin or Ethereum. The price of perpetual contracts is based on the spot price of the underlying asset, plus or minus a funding rate. The funding rate is a fee that is paid by long positions to short positions, or vice versa, every 8 hours. This fee is used to incentivize traders to take opposite positions and provide liquidity to the market. Perpetual contracts are a relatively new product and are not yet widely available. The most popular exchange for trading perpetual contracts is BitMEX. |
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