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  3. What is a Perpetual contract?

What is a Perpetual contract?

  • Perpetual contract refers to digital currency futures that calculate the price, transaction, and settlement in the underlying currency; and can be delivered without waiting until the expiration date. Perpetual contract is a financial instrument derived entirely from virtual currency. The biggest difference between it and traditional futures is that perpetual futures contracts have no definite settlement date, so investors can choose to hold positions indefinitely. Perpetual futures contracts are similar to certain spot transactions, investors can choose to buy or sell accordingly.
  • Perpetual futures positions opened by investors and not closed by the platform will always be there. Hence, perpetual futures contracts also have a leverage effect.
  • The perpetual contract is a new type of futures that evolved from traditional futures. However, compared with it, perpetual futures contracts have no expiration or settlement date and it is more like a margin spot market. Therefore, the trading price is relatively close to the underlying reference index price. – Given that there is no settlement date for a perpetual contract, it is more suitable for long-term positions. In other words, as long as the open position is not liquidated, it will never be passively closed. As long as the pending order is not actively withdrawn, it will be kept forever until the transaction is executed.

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