What are the differences between perpetual swaps and futures in the context of cryptocurrency trading?

1 answers

• Dec 16, 2021 · 3 years ago
  Perpetual swaps and futures are two popular types of derivative contracts in cryptocurrency trading. While they share some similarities, there are several key differences between them. Perpetual swaps are contracts that do not have an expiration date. They are designed to closely track the price of the underlying asset and are settled in the form of funding payments between long and short positions. This means that traders can hold their positions for as long as they want without worrying about contract expiration. On the other hand, futures contracts have a specific expiration date. Traders are required to buy or sell the underlying asset at a predetermined price on the expiration date. Futures contracts are often used for hedging or speculating on the future price of an asset. In terms of trading experience, perpetual swaps offer more flexibility and allow traders to enter and exit positions at any time. They also do not require the actual delivery of the underlying asset. Futures contracts, on the other hand, have a fixed expiration date and require the delivery of the underlying asset, which may involve additional costs and logistics. In summary, perpetual swaps and futures contracts have different characteristics and are used for different purposes in cryptocurrency trading. Traders should consider their trading goals and risk tolerance when choosing between the two.
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