What is the difference between a quarterly contract and a perpetual contract? Which is better? In-depth analysis

As cryptocurrency trading becomes more and more popular, it is crucial for investors to understand the different kinds of contracts if they want to make informed decisions in the market. Quarterly contracts and perpetual contracts are such contracts, and they are both derivatives. A quarterly contract is a contract with an expiration date, usually divided into quarters or months. Perpetual contracts are contracts with no expiration date and can continue to trade without forced liquidation. But for novices, it is not easy to understand what is the difference between seasonal contracts and perpetual contracts? Simply put, the differences are deadlines, rollovers, funding rates, margins, and trading strategies. The editor below will tell you in detail.

What is the difference between a seasonal contract and a perpetual contract?

The difference between the current quarter contract and the perpetual contract is mainly the deadline, extension, funding interest rate, margin and trading strategy. The following is a detailed analysis:

1. Deadline

The current season contract has a deadline by which the transaction must be completed. This means that any transactions made after the deadline will not be processed until the following quarter.

There is no deadline for perpetual contract trading, and traders can trade at any time during the year.

2. Rollover

Currently contract traders must go through a precise rollover process in order to move their positions from one quarter to another. This requires them to roll over their positions to the next quarter.

Perpetual contracts do not require any rollover process as all trades are open until they are closed or liquidated due to margin calls or liquidation fees.

3. Funding Rate

Quarterly contracts typically do not include any type of funding fee as they are designed to be held to maturity and then liquidated at that point.

Perpetual contracts do include a funding fee, which is charged every 8 or 16 hours depending on the contract specification. This fee helps incentivize market makers who provide liquidity by offsetting some of the risk exposure.

4. BTCvsUSDT margin

Both quarterly contracts and perpetual contracts can use Bitcoin (BTC) or Tether (USDT) as margin. While BTC and USDT margin offer similar levels of liquidity and exposure, there are some important differences between them; BTC margin offers more potential profit potential due to its higher volatility, while USDT margin offers more potential profit potential due to its lower Offers greater stability due to volatility, but also lower potential profits compared to BTC margin trading.

5. Trading strategies and uses

Quarterly contracts are suitable for short-term trading or hedging risks, because they have a fixed expiration date and need to be rolled or closed in a timely manner.

Perpetual contracts are more suitable for long-term positions or hedging, because they have no expiration date and can continue to trade, while maintaining price stability through the funding rate mechanism.

Which is better, seasonal contract or perpetual contract?

Choosing current quarter contract or perpetual contract depends on your trading strategy, risk appetite, market observation ability and other factors. If you prefer short-term trading or hedging risk, you may be more suitable to choose the current quarter contract. Because the current quarter contract has a fixed expiration date, it is suitable for short-term trading strategies. If you prefer long-term positions or need to hedge, perpetual contracts may be more suitable for you. Perpetual contracts have no expiration date and can be traded continuously, making them suitable for long-term investment or hedging risks.

The price of the current quarter contract is usually affected by the expiration time, and there may be large price fluctuations before expiration. If you can ride this market volatility and roll or close your position at the right time, the current quarter contract may be right for you. Perpetual contracts are not restricted by expiration dates, are more flexible, and are suitable for situations where continuous trading or long-term positions are required.

The current quarter contract needs to be rolled or closed when it expires. Improper operation may result in losses. Therefore, more careful risk management and trade planning are required. Perpetual contracts maintain price stability through the funding rate mechanism, but you also need to pay attention to the impact of changes in funding rates on positions. It is important to set stop losses and risk control appropriately.

Different exchanges may have different transaction fees and funding costs for current quarter contracts and perpetual contracts. These factors need to be considered to choose the appropriate trading instrument.

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