Risk Management Solutions in Perpetual Futures
Perpetual futures have become a cornerstone of modern crypto and derivatives trading. With no expiration dates, high leverage options, and 24⁄7 global market access, they attract both retail and institutional traders. However, these advantages come with heightened risks. Effective risk management solutions in perpetual futures are essential to prevent overexposure, mitigate liquidation threats, and ensure long-term profitability.
This article explores multiple methods to manage risks in perpetual futures, compares their pros and cons, and provides practical recommendations tailored to different trading profiles.
Understanding the Risk Landscape of Perpetual Futures
Perpetual futures differ from traditional futures because they have no expiry and rely on a funding rate mechanism to keep prices aligned with the spot market. These characteristics create unique risks: