What Is Perpetual Contracts?
Perpetual contracts are a type of derivative contract that has no expiry date. They are similar to traditional futures contracts, but they do not have an expiration date and can be held indefinitely. Perpetual contracts allow traders to speculate on the price movements of underlying assets without having to worry about when their positions will expire. This makes them attractive for those who want exposure to markets with high volatility or long-term trends.
Unlike traditional futures, perpetual contracts also feature built-in leverage which allows traders to increase their potential profits (or losses) by trading with more capital than what is actually in their account balance. Leverage magnifies both gains and losses so it should only be used by experienced traders who understand the risks involved in using this tool. Additionally, perpetual contracts often come with additional features such as funding rates which help keep prices stable over time even if there is low liquidity in the market.