Perpetual Futures vs Quarterly Futures: Key Differences & When to Use Them

When you hear traders talk about "Perpetual Futures\" and "Quarterly Futures", the first question is usually: which one fits my strategy? Both let you bet on price moves without owning the underlying asset, but they diverge on everything from cost structure to risk management. Below we break down the core distinctions, walk through real‑world use cases, and give you a quick decision matrix so you can pick the contract that aligns with your goals.

TL;DR - Quick Takeaways

• Perpetual futures have no expiry, trade 24/7, and charge an 8‑hour funding fee.
• Quarterly futures expire every three months, settle in the base crypto, and avoid funding fees.
• Perpetual contracts typically offer higher leverage, appealing to short‑term scalpers.
• Quarterly contracts suit long‑term position traders and institutional hedgers.
• Liquidity is often deeper on perpetuals for crypto, while quarterly contracts attract institutional flow and clearer price discovery.

Structural Foundations

Understanding the anatomy of each product helps you predict how they behave under market stress.

1. Expiration: Quarterly Futures close on the last Friday of March, June, September and December. Perpetual Futures never expire, letting you hold a position indefinitely-provided you meet margin requirements.
2. Funding Mechanism: Perpetual contracts levy an 8‑hour Funding Fee that nudges the contract price toward the spot market. Quarterly contracts have no recurring fee; you only pay the exchange fee at trade execution.
3. Settlement Currency: Most quarterly contracts settle in the underlying cryptocurrency (e.g., Bitcoin), whereas perpetuals usually settle in a stablecoin like USDT.

Cost Comparison

Fees can eat into profits, especially on positions held for weeks or months.

Leverage & Margin Dynamics

Both contract types let you amplify exposure, but the typical maximum differs.

• Perpetual Futures: Platforms often allow 10‑125× leverage. With 10×, a $1,000 margin controls $10,000 of notional value. The upside and downside scale equally, so robust risk controls are a must.
• Quarterly Futures: Leverage tends to cap around 5‑20×, reflecting the longer holding horizon and institutional focus. Lower leverage reduces liquidation risk but still offers meaningful capital efficiency.

In both cases, the Margin requirement is a function of position size, leverage, and price volatility. A sudden price swing can trigger a margin call, prompting either additional collateral or forced liquidation.

Liquidity Landscape

Liquidity determines how easily you can enter or exit without moving the market.

• Perpetual contracts dominate day‑trading volume, especially in crypto markets that run 24/7. Their order books are deep, but extreme volatility can cause rapid order‑book imbalances.
• Quarterly contracts attract a broader set of participants, from hedge funds to corporate treasuries. The quarterly expiration creates a natural “rollover” activity, boosting volume around contract roll dates.

Risk Management Strategies

Choosing a contract type changes the way you think about risk.

1. Funding‑Fee Exposure: On perpetuals, long positions may pay funding while short positions receive it, and the rate can swing dramatically during market stress. Factor this into your P&L projection.
2. Expiration Decisions: Quarterly contracts force a choice before the expiry date-close, roll, or settle. This decision point can be a disciplined risk‑mitigation moment but also a logistical hassle.
3. Leverage‑Related Liquidation: Higher leverage on perpetuals means tighter liquidation thresholds. Use stop‑loss orders and regularly monitor the Margin ratio.

Who Uses Which Contract?

Different trader personas gravitate toward the contract that matches their time horizon and cost sensitivity.

• Day Traders & Scalpers: Prefer perpetuals for instant entry/exit and the ability to hold positions overnight without worrying about expiry.
• Institutional Hedgers: Opt for quarterly futures to lock in exposure for three months, avoid funding fees, and settle in the actual crypto asset.
• Long‑Term Position Traders: May choose quarterly contracts to accumulate the underlying (e.g., Bitcoin) while sidestepping the recurring funding drag.

Practical Example: Holding BTC for Six Months

Imagine you want exposure to Bitcoin’s price over the next half‑year.

1. Using Perpetual Futures: You open a 5× long position, pay an 8‑hour funding fee that averages 0.01% per interval. Over six months, funding alone could cost ~5% of notional value.
2. Switching to Quarterly Futures: You roll from the Sep‑25 contract to the Dec‑25 contract, then to Mar‑26. No funding fees, but you must manage three rollovers and potentially face small price gaps at each roll.

Run the numbers: if Bitcoin gains 30% over six months, the perpetual route nets roughly 25% after funding, while the quarterly route nets close to 30% minus any roll‑gap slippage. Your choice hinges on whether you value fee simplicity (quarterly) or the convenience of a single, never‑expiring contract (perpetual).

Decision Matrix - Which Contract Suits You?

Key Pitfalls to Avoid

• Ignoring funding‑rate trends on perpetuals can erode profits faster than you expect.
• Missing a quarterly expiration can force automatic settlement, potentially locking in a loss.
• Over‑leveraging because perpetuals advertise 100×; the market can liquidate you in seconds.
• Assuming liquidity is the same across both; during extreme moves, perpetual order books can thin out quickly.

Getting Started - Step‑by‑Step

1. Choose a reputable exchange that offers both contract types (e.g., Binance, Bybit, CME for institutional crypto futures).
2. Complete KYC if required; fund your account with either stablecoins (for perpetuals) or the base crypto (for quarterly).
3. Decide your time horizon:
   • Less than a week → perpetual.
   • Weeks to months → quarterly.
4. Set your leverage level, keeping a comfortable Margin buffer (at least 20‑30% above the liquidation threshold).
5. Place your first order, then immediately set stop‑loss and take‑profit levels.
6. If you chose quarterly, mark the roll dates on your calendar and execute a roll‑over a day before expiry.

Future Outlook

Both contract families are maturing. Perpetuals are adding features like multi‑asset funding rates and reduced fee tiers for high‑volume traders. Quarterly futures are seeing deeper integration with traditional finance, including more robust clearing houses and regulatory oversight. Expect tighter spreads on quarterly contracts as institutional participation grows, while perpetuals will remain the go‑to instrument for rapid, 24/7 crypto trading.