Futures Perpetu: A comprehensive guide to cryptocurrency traders
The world of cryptocurrency trading is an extremely volatile and fast -evolving landscape, with new opportunities that appear every day. A class of assets that have gained significant attention in recent years is the trading perpetual. In this article, we will deepen the concept of perpetual futures trading, its benefits, risks and how it can be used by cryptocurrency traders.
What are the perpetual future?
The perpetual futures, also known as perpetual contracts or perpetual options, are a type of financial derivative that allows traders to bet on the future price of an asset without an expiration. Unlike traditional options, which have an expiration date and must be exercised in a certain time, the perpetual future offers traders control over the endless position.
How does the perpetual futures trading work?
In the trading of perpetual futures, a trader concludes a contract with a (long) buyer or seller (short) of an asset of cryptocurrencies, agreeing to buy or sell the asset at a specified price at a future date. The contract is usually structured as follows:
* underlying assets: The basic cryptocurrency assets that will be traded.
* The price of the strike: The predetermined price at which the trader will close his position.
* Time in force (TIF): The time period in which a buyer or seller must fulfill their obligations. TIF usually varies between 3 and 30 seconds, allowing traders to respond quickly to market developments.
* Notional dimension: The total value of the contract, usually expressed in units of the basic asset.
When a trader concludes a perpetual futures contract, it essentially bets on the movement of the selected cryptocurrency. If the market moves against them and the strike price drops below the current price of the market, the trader will be obliged to buy or sell at the strike price. In contrast, if the market moves in their favor and the strike price increases above the current price of the market, the trader will be obliged to sell or buy.
Benefits of Futures Perpetui transactions for cryptocurrency traders
Perpetual futures trading offers several benefits that make an attractive option for cryptocurrency traders:
* Leverage: using perpetual futures, traders can amplify their yield with a minimum risk. The lever factor is usually greater than traditional options and cryptocurrencies, allowing traders to control larger positions with less capital.
* With low risk: Perpetual futures trading eliminates the need for margin calls or liquidity risks associated with traditional options.
* Market supervision: Traders can monitor market activity and quickly adjust their position in response to changes in the basic asset.
* Scalability: Futures Perpetu allows traders to trade higher volumes at lower costs, making it an ideal choice for speculative traders.
Risks for the perpetual futures trading for cryptocurrency traders
While the perpetual futures trading offers more benefits, there are risks associated with this market:
* Market volatility: The cryptocurrency market is known for its high volatility, which can lead to rapid price movements and losses.
* The risk of liquidity: Perpetual futures contracts often have low liquidity, which makes it difficult to introduce or rapidly exit positions. This can increase the time required to close a position and to lead to significant losses if the market conditions deteriorate.
* The risk of the counterparty:
Traders are exposed to the risk of the counterparty when trading with other parts on perpetue futures platforms. If one party is default, the other may not fulfill their obligations or compensate for losses.
