Perpetual futures trading
Perpetual futures trading is a type of futures contract that does not have an expiration date, allowing traders to hold their positions indefinitely. This is different from traditional futures contracts, which have a specific expiration date and must be settled at that time. Perpetual futures seek to replicate the performance of an underlying spot asset, providing traders with the ability to speculate on the price movements of assets without owning the underlying asset.
Trading perpetual futures involves the use of margin, which enables traders to trade with less upfront funds than traditional spot market trading. The funding rate mechanism is designed to minimize discrepancies between the perpetual futures market and the index price of the underlying spot asset, ensuring that the futures market price aligns with the index price. The funding rate is applied in 1-hour intervals to open positions, with payments between holders of long and short positions based on the difference in the price of the contract and the underlying index pric.
To trade perpetual futures, traders must reside in an eligible, non-US region. The onboarding process for perpetual futures trading requires users to answer a series of questions to meet certain user KYC and suitability standards. After successfully completing onboarding, a new international exchange account will be available for the user throughout the Coinbase Advanced experience. If a user travels to a region that is ineligible after successfully onboarding, their perpetual futures experience will switch to view-only mode, with open positions and funds remaining safe.
In summary, perpetual futures trading is a type of futures contract without an expiration date, allowing traders to hold their positions indefinitely and speculate on the price movements of assets without owning the underlying asset. This type of trading involves the use of margin and a funding rate mechanism to minimize discrepancies between the perpetual futures market and the index price of the underlying spot asset. Traders must reside in an eligible, non-US region to participate in perpetual futures trading on Coinbase Advanced.