TheTrustedProp

CFDs and Perpetual Futures are actually quite similar, but need to understand the fundamental difference how they work Let me explain you without complicated trading terms Imagine an iPhone is worth $1,000 With CFDs: You walk into a shop and tell the shopkeeper, I think the iPhone price will increase The shopkeeper checks what iPhones are selling for in the real market and offers you a deal based on $1,000 If the price goes to $1,100, you earn $100. If it drops to $900, you lose $100 You never actually buy the iPhone You’re simply making a price-based agreement with the shopkeeper The shopkeeper is like your CFD broker. He offers the buying and selling prices, usually based on prices in the wider market Now with Perps: Instead of going to a shopkeeper, imagine entering a huge marketplace with thousands of people. Some believe iPhone prices will rise, others believe they’ll fall One person offers to buy a price-based contract at $990. Another offers to sell at $1,010 When someone agrees to the other’s price, a trade happens Here, the exchange is like the marketplace operator. It brings buyers and sellers together You’re still not buying the actual iPhone. You’re trading a contract linked to its value So what’s the real difference? CFD: You typically make a deal with a broker who quotes prices based on the wider market Perps: You typically trade contracts in a marketplace where buy and sell orders determine the trading price Perps also have something called funding payments, which help keep the contract price close to the real asset price Similar concept, Different mechanics