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What's the difference between Perpetual and Traditional Futures
What's the difference between Perpetual and Traditional Futures

Comparing perpetual and traditional futures.

Updated over a week ago

Perpetual Contract is similar to a traditional Futures Contract but one key difference: There is no expiration or settlement of Perpetual Contracts.

The Perpetual Contract attempts to take advantage of a Futures Contract. The non-delivery of the actual commodity - while mimicking the behavior of the Spot market in order to reduce the price gap between the Futures Price and the Mark Price. This is a remarkable improvement compared to the traditional Futures Contract, which can have prolonged or even unchanged differences versus the Spot Price.

There are several key points that traders should be aware of in a Perpetual Contract:

  • Mark Price: To avoid market manipulations and to ensure that the Perpetual Contract is price-matched to the Spot Price, Mark Price is employed to calculate unrealized Profit and Loss for all traders.

  • Maintenance Margin: Traders should be familiar with Maintenance Margin levels, where auto-liquidation will occur if Total Account Value falls below. We advise traders to liquidate their positions above the Maintenance Margin to avoid force liquidations.

  • Funding: The mid rate exchanged between the long and short positions for the next funding. If the funding rate is positive, longs pay shorts. If negative, shorts pay longs.

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