Differences between Perpetual and Expiry Futures

Introduction

Crypto futures trading is growing fast. More traders use futures to manage risk or make gains. Two types of futures are common in the market. They are perpetual futures and expiry futures. Each has its own structure. Each also suits different trading goals. On CoinW Crypto Exchange, both are available. It is important to understand the differences.

Definition of Perpetual Futures

Perpetual futures have no expiration date. Traders can hold their positions for as long as they want. This type of contract is linked to the spot price. The price stays close through a funding rate system. The funding rate makes sure prices stay in line with the market.

Many traders use perpetual futures. They are popular in crypto futures trading. They let users make short-term and long-term bets. CoinW Crypto Exchange supports this format. The platform also offers tools to manage leverage and margin.

Definition of Expiry Futures

Expiry futures have a set expiration date. Traders must settle the contract on or before this date. These contracts may trade at prices different from the spot market. The price difference comes from interest rates, supply, and demand.

CoinW Crypto Exchange also offers expiry futures. These are useful for traders who want to plan long-term. They can hedge portfolios or predict future prices. Once the contract ends, it is settled in cash or in the asset.

Key Differences in Structure

Perpetual futures do not expire. Expiry futures have a defined end date. This affects trading strategies. Perpetual futures use funding rates. This cost or reward changes over time. Expiry futures do not need funding rates. Their price follows a curve.

Perpetual futures are good for active traders. Expiry futures suit those with longer timeframes. Traders must consider time value. They also must watch how prices move with supply and demand.

Risk and Reward Profiles

Perpetual futures have flexible timeframes. They are easy to enter or exit. But they have funding costs. These can add up or reduce gains. Traders must manage margin risk. Rapid moves in price can trigger liquidations.

Expiry futures limit risk to a set period. There is no ongoing funding fee. But there is time decay. Traders must act before the expiry date. If they wait too long, the market may move against them.

On CoinW Crypto Exchange, risk tools are available. They help limit losses. They also help control leverage. Both contract types carry risk. Traders should use stop-loss tools.

Market Behavior and Pricing

Perpetual futures track the spot price closely. They use funding rates to do this. The funding can be positive or negative. It changes depending on which side of the market is crowded.

Expiry futures have more varied pricing. They may trade above or below spot price. This difference is called basis. It reflects interest rates and demand. Traders must study price curves.

CoinW Crypto Exchange displays these metrics. This helps users compare prices. This helps users decide which contract suits their plan. Clear data makes better trading decisions.

User Preference and Trading Volume

Many crypto traders prefer perpetual contracts. They offer simple trading. No need to track expiry dates. They are good for fast-moving markets.

Some institutional users use expiry futures. They use them for structured trades. They often want to avoid funding fees. They use expiry to lock in future prices.

CoinW Crypto Exchange offers both. The platform has liquidity for each. It gives fair pricing and low slippage. New users can choose what fits their plan.

Conclusion

CoinW Crypto Exchange gives users many options. You can trade both perpetual and expiry futures. Each has benefits. Each has risks. Perpetual futures offer flexibility. Expiry futures offer structure. You can explore both.

Sign up now. Become a user of CoinW. Try our crypto futures trading with low fee transactions. Join the CoinW Crypto Exchange and start trading smarter.