The cryptocurrency market is constantly fluctuating, creating countless opportunities for traders. Besides spot trading (direct buying and selling), perpetual futures (Perpetual) have emerged as a popular tool, allowing investors to maximize profits with high leverage. So what is Perpetual? How does it work? This article from Blogtienao will provide an in-depth look at this attractive derivative.

What is Perpetual?

Perpetual, also known as perpetual futures, is a type of derivative contract that allows investors to buy (long) or sell (short) an underlying asset (usually cryptocurrency) at a predetermined price in the future. The main difference between Perpetual and traditional futures contracts is that there is no expiration date. This means investors can hold their positions for as long as they wish, as long as their accounts have enough margin to maintain those positions.

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Characteristics of Perpetual

  • No expiration date: Investors can hold their position indefinitely.

  • Trading with leverage: Investors can use leverage to amplify profits (and risks).

  • Periodic payments: Perpetual uses the "funding rate" mechanism to ensure the contract price closely follows the spot market price.

  • Trading 24/7: The Perpetual market operates continuously, without restrictions on trading hours.

How Perpetual Works

  • Leverage: Investors only need to put down a small portion of the contract value (margin) to open a position.

  • Funding rate: This is a periodic fee paid between buyers (long) and sellers (short) to balance the contract price with the spot market price. If the funding rate is positive, the buyer pays the seller, and vice versa.

  • Liquidation: If the price moves against the investor's position and their account does not have enough margin, the position will be liquidated.

Advantages and disadvantages of Perpetual

Advantages:

  • Flexibility: No expiration date, allowing investors to actively manage their positions.

  • High leverage: Amplifying profits with small capital.

  • Trading 24/7: Taking advantage of all market fluctuations.

Disadvantages:

  • High risk: High leverage also means high liquidation risk.

  • Funding rate: It can reduce profits if the market moves sideways.

  • Complexity: The mechanism is more complex than spot trading.

Top 7 outstanding Perpetual projects

  1. Binance Futures: The largest Perpetual trading platform in the world, offering a variety of cryptocurrencies and leverage up to 125x.

  2. Bybit: A popular Perpetual trading platform with a user-friendly interface, high leverage, and many trading support features.

  3. dYdX: A leading decentralized derivative exchange (DEX), using ZK-Rollups to provide Perpetual trading at high speed and low cost.

  4. Gate.io: An established exchange with many cryptocurrencies and high leverage, suitable for investors who favor diversity.

  5. KuCoin Futures: A Perpetual trading platform with many attractive promotional programs, drawing new users.

  6. MEXC: An exchange focused on altcoins, offering Perpetual with high leverage and competitive trading fees.

  7. OKX: A Perpetual trading platform with many technical analysis tools, assisting investors in making trading decisions.

Preliminary assessment:

  • Binance Futures: The top choice with high trading volume, liquidity, and reliability.

  • Bybit: User-friendly interface suitable for both new and professional investors.

  • dYdX: Promising DEX with advanced technology, providing a decentralized trading experience.

  • Gate.io: A variety of products, suitable for investors who enjoy exploration.

  • KuCoin Futures: Many attractive promotions, drawing new users to participate.

  • MEXC: Focused on altcoins, providing investment opportunities in potential projects.

  • OKX: Offers many analytical tools to help investors make effective trading decisions.

Note: This is only a preliminary assessment; investors should conduct thorough research before making trading decisions on any platform.

Conclusion:

Perpetual is an attractive derivative trading tool, offering high profit opportunities for market-savvy investors. However, investors need to be fully aware of the risks and equip themselves with sufficient knowledge before participating in Perpetual trading. With the continuous development of the cryptocurrency market, Perpetual will continue to be one of the top choices for traders looking to maximize profits.

Source: BLOGTIENAO