What is perpetual/futures trading exactly?

bettercrypto

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Quote from: cafter on December 05, 2023, 12:07:05 AM

I know in perpetual contracts we try to predict the future price of bitcoin without any expiry date. and future price of bitcoin is decided by future spot price.
where institutions with huge capital try to move bitcoin spot price in their favor.

my question is:
Is I understood it right?
why Bitcoin perpetual have higher volume then spot?
do institution with huge capital try to move the spot price of bitcoin in their favor? to get high profit from perpetual.
do they divide their capital in two?, one for spot trading to move the price and one for futures trading to maximize their capital by leverage?
Do derivative/perpetual volume impact the bitcoin price in spot?
Do liquidation in perpetual impact price of bitcoin in perpetual and spot?

Please try to give answer of all questions if you know.

As far as I know, maybe the Bitcoin perpetual volume is higher than the spot because of the different leverages. then when it comes to the trading hour, it is only limited to spot trading, while in perpetual, it is not like that; instead, it is open 24/7.

Then, when it comes to liquidity, perpetual gives incentives compared to spot trading; there is nothing like that, so the majority of people who use perpetual are probably attracted to this offer. This is what I know about this matter.

Here's the difference between Perpetual and Spot trading: https://www.gate.io/blog_detail/247/difference-between-perpetual-futures-and-spot-trading

franky1

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Quote from: cafter on December 05, 2023, 03:37:11 AM

Quote from: Jawhead999 on December 05, 2023, 03:34:37 AM

snip

also it's called market manipulation which is illegal.

market manipulation is illegal if for instance its the exchange service owner itself doing the manipulating on its own platform, using fake balance.

if customers/traders are trading using their real value and making their own trade decisions, then its called smart trading and perfectly legal

Hamza2424

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First of all OP, I'm wondering why you've spent quite a decent time on the forum and still are making such posts in the Bitcoin discussion, the topic doesn't belong to this section, better move it to the trading discussion.

1: You've understood it partially right.
2: Becasue, in the perpetual you borrow money if you have only 1k capital perpetual you can borrow from the 1X to 125X of your capital depending on the platform you are using, so obviously with borrowed money you can generate more volume.
3: NO
4: NO
5: NO
6: NO

cafter

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Quote from: Jawhead999 on December 05, 2023, 03:34:37 AM

snip

also it's called market manipulation which is illegal.

franky1

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futures traders do bigger deals of 1000btc+(after leveraged totals) per whale on futures market. like last week betting that the spot market will not exceed $39k
they also using a couple btc do trades per whale on the spot market to keep the price below $39k(to ensure their futures contracts win)

when their future market contracts complete.. they no longer need to trade on the spot to keep the spot price down. thus their spot walls disappear. and the natural spot trading of normal people then can buy above $39k

Jawhead999

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Quote from: cafter on December 05, 2023, 12:07:05 AM

Is I understood it right?
why Bitcoin perpetual have higher volume then spot?
do institution with huge capital try to move the spot price of bitcoin in their favor? to get high profit from perpetual.
do they divide their capital in two?, one for spot trading to move the price and one for futures trading to maximize their capital by leverage?
Do derivative/perpetual volume impact the bitcoin price in spot?
Do liquidation in perpetual impact price of bitcoin in perpetual and spot?

Correct, but I disagree with your point where you said the "institutions can move Bitcoin price base on their favor".

It means many people are interested to trade in perpetual instead spot.

No one can answer it, that's just a conspiracy.

Similar like third answer.

When there are supply and demand, there's always an influence to the market regardless how small or big the effect is.

cafter

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Quote from: franky1 on December 05, 2023, 01:03:50 AM

snip

if huge liquidation occurred on perpetual market, then will it move price of spot market? and the liquidated trader have position in only perpetual market nothing in spot.
how it will impact the price of spot market if the liquidation is on perpetual market?
and if they are correlated to each other then how? it's so confusing to understand for me.

my one theory/assumption is that when the trader buy one bitcoin with 10x leverage on perpetual market then the broker will give him 1 btc with is he real investment and broker will invest his 10btc my seeing the trader.
In total broker have 11btc to trade 1 of trader + 10 of broker. and they both took position at a specific price if the trade goes against the trader by 10percent then he will get liquidated and broker will withdraw his 10btc without any loss.

Is my assumptions is right? just was thinking by my own I think i got the answer.

Liquid71

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I get what perpetual futures trading is, where can I do it safely if I l live in the U.S. and not afraid to use a VPN and get any counter party risk is risk which is why real Bitcoin get it's value. I just want to know if there is a way living in the U.S. I can deposit and trade accepting counter party risk, but not worry about getting paid when I withdraw. In other words site goes Mt. Gox that's what I get for holding coins on a site, otherwise no prob using a VPN ect but do I have to sweat getting paid or just the trades?

franky1

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whales do not put their hoard of coins on the spot market
if you look at the market orderbook of spot market most order lines are under 1btc

whales bet using multiple bitcoins and ontop of that leverage it which makes the volume of futures market multiple times higher

yes whales do then put a small percentage of hoard into spot where they then create walls and arbitrage deals to control the spot price to keep the price exceeding their bet limit

we seen it saturday where alot of futures contracts completed where they bet the price wont go over $39k
we seen it sunday where alot of futures contracts completed where they bet the price wont go over $40k

weekend-yesterday where alot of futures contracts completed where they bet the price wont go over $39k-$40k. and now they won. they dont need to control the price to stay under $39k-$40k and so the natural spot market was allowed to climb.

if you look at a monthly spot chart and you see flatlines like
/\
/ \_/\/\/\/\//\/^\/\/\/\/\/\/\_/\/\/\/\/

instead of

/\ |\ /\/\ /\ /\
/ \/ \/\/ |/ \/\/\/ \
this is an indicator of whale controlling a market. prices dont usually stay flat in a volatile currency

adaseb

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The difference between spot and perp is mostly leverage. With spot you basically got 1x leverage. There is margin trading which is slightly higher leverage like 3-5x. You borrow USD to buy more BTC and pay interest.

Perp trading is basically up to 100-200x or so. And it’s meant for short term trades because you pay a funding fee every hour if you are going with the crowd. If you are against the crowd you sometimes get paid for funding instead of paying it. Hence why these are best for short term trades. You can also get liquidated but 1x spot trading you can’t.

cafter

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I know in perpetual contracts we try to predict the future price of bitcoin without any expiry date. and future price of bitcoin is decided by future spot price.
where institutions with huge capital try to move bitcoin spot price in their favor.

my question is:
Is I understood it right?
why Bitcoin perpetual have higher volume then spot?
do institution with huge capital try to move the spot price of bitcoin in their favor? to get high profit from perpetual.
do they divide their capital in two?, one for spot trading to move the price and one for futures trading to maximize their capital by leverage?
Do derivative/perpetual volume impact the bitcoin price in spot?
Do liquidation in perpetual impact price of bitcoin in perpetual and spot?

Please try to give answer of all questions if you know.

Topic: What is perpetual/futures trading exactly? (Read 111 times)