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Infinance, a perpetual futures contract, also known as a perpetual swap, is an agreement to non-optionally buy or sell anassetat an unspecified point in the future. Perpetual futures are cash-settled, and they differ from regularfuturesin that they lack a pre-specified delivery date and can thus be held indefinitely without the need toroll overcontracts as they approach expiration. Payments are periodically exchanged between holders of the two sides of the contracts, long and A perpetual swap, also known as a perpetual futures contract, is a financial derivative product that allows traders to speculate on the price movement of cryptocurrencies Perpetual swaps are a type of high-risk derivative trading product unique to the crypto market. Here\'s what they are, how they work and what risks to be aware of. Perpetual Contracts are synthetic trading markets that allow for exposure to arbitrary liquid assets using stablecoin (USDC) collateral. By trading Perpetuals, you can participate in Definition: ‘Perpetual Swap’ also known as a ‘Perpetual Futures Contract’, is an agreement that allows counter-parties to non-optionally trade an asset (e.g bitcoin) without A perpetual swap contract is a type of crypto derivative that allows traders to take short (sell) or long (buy) positions on underlying crypto assets. The advantages of perpetual Perpetual futures, also known as perpetual swaps or “perpetuals,” are a type of derivative contract that allows traders to speculate on the future price of an asset without an Perpetual swaps are unique financial instruments that offer a way to trade on the future price of an asset without a fixed expiration date. Think of it like betting on how much a

What is a Perpetual Swap Contract? A Comprehensive Guide

Are you looking to understand the world of perpetual swap contracts? This guide will break down this popular, yet complex, financial instrument, especially as it relates to cryptocurrency trading. Often referred to as perpetual futures contracts or simply "perpetuals," these derivatives offer unique opportunities and risks.

Perpetual Swap Explained: The Basics

A perpetual swap, also known as a perpetual futures contract, is a financial derivative product that allows traders to speculate on the price movement of cryptocurrencies (and other assets) without a fixed expiration date. Think of it like betting on how much a specific asset\'s price will increase or decrease. Unlike traditional futures contracts, perpetual swaps don\'t require you to roll over your position as the expiration date approaches.

Definition: ‘Perpetual Swap’ – also known as a ‘Perpetual Futures Contract’ – is an agreement that allows counterparties to non-optionally trade an asset (e.g., Bitcoin) without a predetermined expiration date. This means you can hold your position indefinitely.

How Perpetual Swaps Work

Infinance, a perpetual futures contract, also known as a perpetual swap, is an agreement to non-optionally buy or sell an asset at an unspecified point in the future. Perpetual futures are cash-settled, and they differ from regular futures in that they lack a pre-specified delivery date and can thus be held indefinitely without the need to roll over contracts as they approach expiration. Payments are periodically exchanged between holders of the two sides of the contracts, long and short positions.

Perpetual contracts are synthetic trading markets that allow for exposure to arbitrary liquid assets using stablecoin (USDC) collateral. Traders can take either a long (buy) or short (sell) position, depending on whether they believe the asset\'s price will rise or fall. Profits and losses are realized through the price difference between the entry and exit points of the contract.

Key Features:

  • No Expiration Date: Unlike traditional futures, perpetual swaps can be held indefinitely.
  • Cash-Settled: Settlement is done in cash, meaning you don\'t need to own the underlying asset.
  • Leverage: Perpetual swaps typically offer high leverage, amplifying both potential profits and losses.
  • Funding Rate: A mechanism to keep the perpetual contract price close to the spot price of the underlying asset. Traders either pay or receive funding based on their position and the prevailing funding rate.

Risks to Consider

Perpetual swaps are a type of high-risk derivative trading product unique to the crypto market. While they offer the potential for significant gains, they also carry substantial risks. Here\'s what to be aware of:

  • High Volatility: Cryptocurrency markets are inherently volatile, which can lead to rapid price swings and significant losses.
  • Liquidation Risk: Due to high leverage, a small adverse price movement can trigger liquidation, resulting in the loss of your collateral.
  • Funding Rate Fluctuations: Unfavorable funding rates can erode profits or increase losses over time.
  • Complexity: Perpetual swaps can be complex instruments, requiring a strong understanding of market dynamics and risk management.

Advantages of Perpetual Swap Contracts

A perpetual swap contract is a type of crypto derivative that allows traders to take short (sell) or long (buy) positions on underlying crypto assets.

In summary, perpetual swaps are unique financial instruments that offer a way to trade on the future price of an asset without a fixed expiration date. However, they require careful consideration and a solid understanding of the associated risks.

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