It's simple. A Future contract is basically when buy/sell a currency (or something else) at a predetermined price on a selected date in the future.
- Quarterly Futures contract => expires after a 3 months period (4 quarters per year, 1 quarter=3months)
- Perpetual Futures => it does not have an expiry date unlike traditional forms of futures contracts. It can be perpetual
Answer was very simple but very helpful.
Thanks.
To add a bit more precision, perpetual contracts are called "swaps" (not futures) because unlike futures contracts, they don't settle at a future date. Instead, perpetual swaps charge swap holders periodic interest (usually every 8 hours) to keep the market pegged to the spot index. That means when bulls drive the price above spot, interest rates on longs go up. When bears drive the price below spot, interest rates on shorts go up.
Futures, on the other hand, often diverge from spot prices. During strong uptrends, there will be big premiums above spot. During strong downtrends, they will trade at a significant discount.
In my view this tends to make futures optimal for longer term trading (when you plan to hold for weeks or months at a time) whereas perpetual swaps are better suited for short term due to the constant interest charges.
