Understanding Perpetual Futures Contracts

Perpetual futures contracts, also known as perpetual swaps, are a type of derivative that allows traders to speculate on the price of an asset without an expiration date. This innovative financial instrument enables traders to maintain positions indefinitely, provided they meet margin requirements. Key features include the use of leverage, which allows for larger positions with less capital, and a funding rate mechanism that ensures the contract price stays close to the spot price of the underlying asset. These contracts are widely used in cryptocurrency markets, offering continuous trading opportunities and increased liquidity compared to traditional futures.