What is the difference between contract trading and futures trading?

Difference: Contract trading uses perpetual contracts, which provide unlimited holding time and high leverage, and are suitable for short-term speculators. Futures trading uses standardized contracts with clear expiration dates and lower leverage, making it more suitable for long-term investors and traders who want to hedge risks. The difference between the two is mainly reflected in the trading mechanism, leverage, funding rate, position holding time and suitable traders.

Comparison of contract trading and futures trading

1. Contract trading

Definition: Contract trading is a form of leveraged trading based on predicting the future price direction of cryptocurrency. Traders can bet that prices will rise (long) or fall (short) and use leverage to amplify potential profits and losses.

Mechanism: Contract transactions are matched by exchanges and use perpetual contracts, which means that the contracts have no expiration date and can be held indefinitely. Traders can adjust the leverage ratio based on the margin size. The higher the leverage ratio, the greater the profit and loss margin.

Features:

• With perpetual contracts, there is no expiry date.
• High leverage, magnifying returns and risks.
• The funding rate mechanism encourages a balance between long and short parties.

Suitable for:

• Short-term speculative traders seeking quick profits.
• Skilled traders are able to manage risk and utilize leverage.
• Extremely tolerant of cryptocurrency market volatility.

2. Futures trading

Definition: Futures trading is a standardized contract that stipulates that buyers and sellers will trade on a specified date in the future. Buy or sell a specific amount of an asset at a specific price. In the cryptocurrency world, it usually refers to futures contracts with cryptocurrency as the underlying object.

Mechanism: Futures contracts are traded on a futures trading platform and have a definite expiry date. Traders can bet that prices will rise or fall and use margin to control their positions, but unlike contract trading, futures trading has a limited range of leverage that is typically lower.

Features:

• Standardized contract with clear expiration date.
• Lower leverage, reducing potential risks and returns.
• A handling fee is usually required.

Ideal for:

• Long-term investors looking to hedge risk or perform spread trades.
• Traders who are not used to high leverage trading.
• Value stability and be willing to hold positions until expiration.

Comprehensive comparison of contract trading and futures trading

特征	合约交易	期货交易
合约类型	永续合约	标准化合约
到期日	无到期日	有明确到期日
杠杆	高杠杆，可调	低杠杆，有限
资金费率机制	有	无
持仓	可无限期持有	持仓至到期日
适合交易者	短期投机者	长期投资者、对冲者

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