Which of the three major encryption trading schools should you choose?

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Abstract generation in progress

Newbie get on board the password currency market is often confused by three concepts: Spot, Spot Margin, Futures. On the surface, they all seem to be “buy and sell”, but the mechanisms are completely different, and the risk levels are worlds apart.

Spot trading = Buy a souvenir

The most straightforward way. You have 100, buy 100 worth of BTC, and BTC really arrives in your wallet. No borrowing, no contracts, just the purest “I have this coin”. Suitable for Newbies and long-term holders, safe but also means - you can only make money if the price goes up.

Spot Leverage = Borrowing Money to Trade Stocks

You have 100, but the exchange lends you 900, making a total of 1000 to buy coins. Sounds great? But the problem is:

  • A deposit is required (your other coins)
  • The exchange will charge interest on loans.
  • When the coin price drops to a certain level, the system automatically forces the sale of your coin to pay off debts (“liquidation”).

Up to 10x leverage supported. Happy when making money, and still happy when losing (in the opposite direction).

Futures = Bet on price trends

There are no real coins here. You are betting against the exchange: “I bet BTC will rise to xx dollars tomorrow.” If you win, the exchange gives you money; if you lose, your margin disappears. Characteristics:

  • No need to hold actual assets
  • Can be bullish or bearish (short selling)
  • Leverage up to 125x (crazy)
  • Has a contract expiration date (regular delivery) or perpetual (held indefinitely)

Different Charges: Spot only charges a handling fee; leverage charges more interest and liquidation fees; futures also have funding rates (short sellers must pay money to long buyers, and vice versa).

Risk Level Ranking

Spot < Spot Margin < Futures

Want to hold coins steadily for the long term? Spot. Want to make quick money in the short term but can bear risks? Leverage. Want to gamble wildly for returns or have insufficient funds but are bold? Futures (but 99% of Newbies lose everything here).

The choice is yours, but losing money won't be polite.

BTC-0,79%
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