Key Points / Perps
In the crypto trader jargon, perps is short for perpetual contract or perpetual swap
Perp is a popular derivative product introduced by BitMEX trading platform.
Similar perpetual product is now traded on FTX, Bitforex, Kraken Futures, Binance and elsewhere.
Perp or perps is short for perpetual swap.
As of 2021, $PERP is also the ticker of the Perpetual protocol alt coin - a token of a decentralized perpetual swap exchange.
What is perpetual swap?
Perpetual swap is derivative product similar to a futures contract, except there is no expiration date.
When trading perps, you will not get the specific behavior that futures contracts have near their expiration date. If your trade is speculative, you also don’t have to worry about timing the market - perpetual futures never expire. You can carry on holding the contract as long as you want. In this way, perps behave much like the spot market.
Another point that makes perps similar to spot is that you pay interest on your borrowed margin.
The most important difference perps have from spot is that perps are crypto-based.
- To long a BTCUSD perpetual contract, you deposit BTC.
- On the spot market, you need to deposit or borrow USD to open a long on the BTCUSD market.
Is perps trading a good fit for you?
- If you are speculating short term and interested in getting your profit in crypto, perps will do a better job than margin trading. In perpetual swap, your profit after you close the contract comes directly in crypto. Trading BTCUSD on spot gives USD profit.
- If you want to long without leverage, in the sense of buy and hold, spot market is a better fit for that purpose.
- If you are already holding BTC and want to increase your stash, trading perps, leveraged futures and alt coin markets are your best options.
- If you want to set up a yield generating strategy, you may use the funding feature of perpetual swap. In some market situations, your open perp position pays interest, in others it yields interest. Here is a guide to arbitraging the swap interest on Binance.
Best platforms to trade perpetual swap
- FTX (KYC, no US) - good for alt perps
- Binance (KYC, no US) - classic
- Bitforex (no KYC) - small but no KYC