Perpetual Contracts

A Perpetual Contract is a derivative product that is similar to a traditional Futures Contract. It is an agreement to buy or sell a commodity at a specified price at a predetermined time in the future. However, there is one primary difference: unlike Futures, Perpetual Contracts do not expire. You can hold your positions for as long as you need. In addition, perpetual contracts mimic the margin-based spot market and hence, trade very close to the Index Price. You can also use leverage to amplify the outcome of your deals. Of course this also means that if the price of your commodity decreases in an amount equal to your initial margin (the percentage of the total Funds you provided as collateral), your position will automatically liquidate.

 

Is leverage trading risky?

Trading perpetual contracts using leverage amplifies the outcome of any deal. This means that you can yield bigger profits, but also price decreases means that your positions may liquidate much faster. However, it is important to note that Phemex provides you with a variety of instruments to help manage your risk.

Will perpetual contracts ever be settled?

No, unlike to Future Contracts, Perpetual Contracts will never reach an expiration date when they must be settled.

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Updated on March 31, 2020

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