A perpetual contract or perp is an innovative trading tool that allows traders to capitalize on their market predictions without needing to own the actual asset. Here's how it simplifies:

Fig 1: Bear means down. Bull means up.

Bullish Traders (Long Positions)

• They predict an asset's price will increase.

• They "buy" the contract, hoping to sell it later at a higher price for a profit.

Bearish Traders (Short Positions)

• They anticipate the price will decrease.

• They "sell" the asset they don't own, planning to buy it back later at a reduced price to profit from the price drop.

Fig 2: Order Book. It matches sell and buy orders.

The perpetual contract serves as the mediator for these trades:

• It maintains an order book where all Long and Short positions are recorded.

• Open Interest reflects the total value of all open contracts, showing how much speculation is currently active.
  

Here’s the process:

• When a trader takes a Long position, they're essentially matched with someone who has taken a Short position. 

• The exchange facilitates this match, keeping track of who needs to buy and who needs to sell.
  

Suppose:

Scenario 1:

Scenario 2:

Perpetual contracts are essentially a financial ledger for market speculation:

• They allow traders to express their market views without owning the asset.

• The exchange manages the transactions, ensuring that every Long is matched with a Short, simplifying the trading process.

This system allows traders to benefit from both rising and falling markets, making perps a versatile tool in your trading arsenal.  Join the waitlist for our AI-powered trading platform at 10x.trade

A perpetual contract or perp is an innovative trading tool that allows traders to capitalize on their market predictions without needing to own the actual asset. Here's how it simplifies:

Fig 1: Bear means down. Bull means up.

Bullish Traders (Long Positions)

• They predict an asset's price will increase.

• They "buy" the contract, hoping to sell it later at a higher price for a profit.

Bearish Traders (Short Positions)

• They anticipate the price will decrease.

• They "sell" the asset they don't own, planning to buy it back later at a reduced price to profit from the price drop.

Fig 2: Order Book. It matches sell and buy orders.

The perpetual contract serves as the mediator for these trades:

• It maintains an order book where all Long and Short positions are recorded.

• Open Interest reflects the total value of all open contracts, showing how much speculation is currently active.
  

Here’s the process:

• When a trader takes a Long position, they're essentially matched with someone who has taken a Short position. 

• The exchange facilitates this match, keeping track of who needs to buy and who needs to sell.
  

Suppose:

Scenario 1:

Scenario 2:

Perpetual contracts are essentially a financial ledger for market speculation:

• They allow traders to express their market views without owning the asset.

• The exchange manages the transactions, ensuring that every Long is matched with a Short, simplifying the trading process.

This system allows traders to benefit from both rising and falling markets, making perps a versatile tool in your trading arsenal.  Join the waitlist for our AI-powered trading platform at 10x.trade