What factors should be considered when deciding whether to trade perpetual or standard futures contracts in the digital currency space?

3 answers

• Dec 27, 2021 · 3 years ago
  When deciding between perpetual and standard futures contracts in the digital currency space, there are several factors to consider. Firstly, one should assess their risk tolerance. Perpetual contracts offer the advantage of no expiration date, allowing traders to hold positions indefinitely. On the other hand, standard futures contracts have a fixed expiration date, which may be more suitable for short-term traders. Additionally, traders should consider the funding mechanism of perpetual contracts, as they may incur funding costs if the contract's price deviates significantly from the underlying asset's price. Another important factor is liquidity. Perpetual contracts tend to have higher trading volumes and tighter spreads compared to standard futures contracts. Lastly, traders should evaluate the fees associated with each type of contract, including trading fees, funding fees, and any other charges. By carefully considering these factors, traders can make an informed decision on whether to trade perpetual or standard futures contracts in the digital currency space.
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• Dec 27, 2021 · 3 years ago
  Deciding whether to trade perpetual or standard futures contracts in the digital currency space requires careful consideration of various factors. One important factor is the trading strategy and time horizon. Perpetual contracts are suitable for traders who want to hold positions for an extended period without worrying about contract expiration. On the other hand, standard futures contracts are more suitable for short-term trading strategies. Another factor to consider is the funding rate of perpetual contracts. This rate is periodically adjusted based on the contract's premium or discount to the underlying asset's price. Traders should be aware of the funding costs they may incur when holding positions in perpetual contracts. Additionally, liquidity is an important consideration. Perpetual contracts generally have higher trading volumes and tighter spreads, providing better liquidity compared to standard futures contracts. Lastly, traders should evaluate the fees associated with each type of contract, including trading fees and funding fees. By carefully evaluating these factors, traders can make an informed decision that aligns with their trading goals and risk tolerance.
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• Dec 27, 2021 · 3 years ago
  When deciding whether to trade perpetual or standard futures contracts in the digital currency space, it's crucial to consider various factors. One factor to consider is the trading flexibility offered by perpetual contracts. Unlike standard futures contracts, perpetual contracts do not have an expiration date, allowing traders to hold positions for as long as they want. This flexibility can be advantageous for traders with a long-term investment strategy. Another factor to consider is the funding mechanism of perpetual contracts. Traders should be aware that they may have to pay or receive funding based on the contract's premium or discount to the underlying asset's price. Liquidity is also an important consideration. Perpetual contracts often have higher trading volumes and tighter spreads, making them more liquid compared to standard futures contracts. Lastly, traders should evaluate the fees associated with each type of contract, including trading fees and funding fees. By considering these factors, traders can make an informed decision that suits their trading style and objectives.
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