Perpetual trading (or perpetual futures trading) is a type of derivatives trading where traders buy or sell contracts that track the price of an asset, such as Bitcoin or Ethereum, without an expiration date.
Key points:
No expiry date: Unlike traditional futures contracts, perpetual contracts can be held indefinitely.
Leverage: Traders can use borrowed funds (e.g., 5×, 10×, or 20× leverage) to control larger positions with less capital. This increases both potential profits and losses.
Long and short positions: Traders can profit whether the market goes up (long) or down (short).
Funding rate: Periodic payments are exchanged between long and short traders to keep the perpetual contract price close to the spot market price.
Liquidation risk: If the market moves too far against a leveraged position, the exchange may automatically close (liquidate) the trade to prevent further losses.
Example:
If Bitcoin is trading at $100,000 and you open a 10× long position with $1,000, you control $10,000 worth of Bitcoin. If Bitcoin rises by 5%, your profit is about $500 (before fees). If it falls significantly, you could lose your entire $1,000 and have your position liquidated.
Perpetual trading is popular in cryptocurrency markets because it offers flexibility and the ability to profit from both rising and falling prices, but it is also high risk due to leverage.
$ETH
Key points:
No expiry date: Unlike traditional futures contracts, perpetual contracts can be held indefinitely.
Leverage: Traders can use borrowed funds (e.g., 5×, 10×, or 20× leverage) to control larger positions with less capital. This increases both potential profits and losses.
Long and short positions: Traders can profit whether the market goes up (long) or down (short).
Funding rate: Periodic payments are exchanged between long and short traders to keep the perpetual contract price close to the spot market price.
Liquidation risk: If the market moves too far against a leveraged position, the exchange may automatically close (liquidate) the trade to prevent further losses.
Example:
If Bitcoin is trading at $100,000 and you open a 10× long position with $1,000, you control $10,000 worth of Bitcoin. If Bitcoin rises by 5%, your profit is about $500 (before fees). If it falls significantly, you could lose your entire $1,000 and have your position liquidated.
Perpetual trading is popular in cryptocurrency markets because it offers flexibility and the ability to profit from both rising and falling prices, but it is also high risk due to leverage.
$ETH
