Cryptocurrency Trading Beginner's Encyclopedia: Understanding All "Money-Making Tools" from Spot to Options in One Article

For beginners just entering the market, terms like “Spot,” “Perpetual,” “Coin-Margin,” and “Options” on the trading interface can often be confusing. In fact, these concepts are simply different “trading rules.”

We compare this market to a huge financial supermarket, starting from the basic logic to help you understand.

First Stop: Spot Trading — The Foundation of Trading

【Definition】

Spot trading is the most traditional form of trading: pay one hand, deliver the other.
You pay with one asset (e.g., USDT) and immediately gain ownership of another asset (e.g., BTC).
It’s like buying apples at the supermarket—pay, and the apples go into your pocket; they are fully yours.

【Core Features】

Low risk: No concept of “liquidation,” as long as the coin doesn’t go to zero, you can hold indefinitely.

One-way profit: You only make money when prices go up.

【Common Trading Pairs Examples】

​​​​​​​BTC/USDT: Use USDT to buy BTC

ETH/BTC: Use BTC to buy ETH

Example:
You buy BTC with 1000 USDT
Price rises to 1200 → profit of 200
Price drops to 800 → loss of 200
👉 Suitable for beginners to practice first

Second Stop: Contract Trading — Trading “Price Expectations”

【Definition】

You’re not buying coins but a contract. You and your counterparty agree: at a future time, buy or sell an asset at a specified price.
You can:

Go long (profit when price rises)
Go short (profit when price falls)
Use leverage to amplify gains and risks

1. Perpetual Contracts

​​​​​​​【Definition】

Contracts without an expiration date; as long as your account has sufficient margin, you can hold them indefinitely.

【Core Mechanism: Funding Rate】

To keep the contract price close to the spot price, long and short positions periodically pay funding fees.

​​​​​​​Longs pay → Longs pay

Shorts pay → Shorts pay

Usually settled every 8 hours.

【Common Trading Pairs】

BTCUSDT Perpetual

ETHUSDT Perpetual

2. Delivery Contracts

【Definition】

Contracts with a clear expiration date (weekly, quarterly, etc.); upon expiration, the system will forcibly settle regardless of the price.

【Features】

No funding rate

Fixed settlement time

Prices may show premium or discount

More used for institutional arbitrage or hedging.

【Example】
BTC Quarterly
BTC/27MAR26

Third Stop: Settlement Basis — Are You Earning in “USD” or “Coins”?

In contract trading, you need to decide: what to use as margin? How to settle profits and losses?
This is the “basis.”

1. USDT-Margin (U-Margin)

【Definition】

Use USDT as margin, and profits/losses are settled in USDT.

【Advantages】

Profits and losses are straightforward (how much USDT you earn is how much you gain).
Fiat value is stable (USDT is pegged to USD).

Example:
You open a 10x BTCUSDT long with 1000 USDT
A 1% increase → 10% profit (100 USDT)
Losses are also in USDT
👉 Very friendly for beginners, simple risk calculation

2. Coin-Margin

【Definition】

Use coins like BTC, ETH as margin; profits/losses are settled in the same coin. For example, using BTC as margin to trade BTCUSD contracts.

【Risk Characteristics】

When prices go up: contract profit + margin appreciation (double gain)
When prices go down: contract loss + margin devaluation (double loss)

Suitable for traders who are long-term bullish on a coin and want to “roll over” their coins.

【Example】
BTCUSD Perpetual (Coin-Margin)
If BTC rises, you not only profit from the contract but also see your margin appreciate.

Fourth Stop: Options — Buying and Selling a “Right”

【Definition】

Options give you the right, but not the obligation, to buy or sell an asset at a specified price at a future date.

Call Option: Bullish — buy the right to purchase at a lower price.
Put Option: Bearish — buy the right to sell at a higher price.

【Features】

Limited loss, unlimited profit (for buyers): your maximum loss is the premium paid.
Non-obligatory: if the market moves against you at expiration, you can choose not to exercise the option, letting it expire worthless.
Leverage effect: use a small amount of money (premium) to potentially gain high returns from market volatility.

【Example】
BTCUSD-20261226-25000-C

Imagine you’re interested in a house worth 1 million, but worry about a big price increase next month. You pay 10,000 as a “deposit” (premium), agreeing that next month you can buy the house at 1 million.
If the price rises to 1.5 million: exercise your right, buy at 1 million, and earn 490,000 (minus the 10,000 premium).
If the price drops to 800,000: you choose not to exercise, lose only the 10,000 premium, and can buy cheaper on the market. Your maximum loss is that premium.

Comprehensive Comparison Table (Must-Know for Beginners)

Spot is the “rice,” contracts are the “chili”: spot should occupy most of your position, while contracts are just a small seasoning or gambling tool.

Newcomers should first choose USDT-Margin: before mastering complex price fluctuation calculations, stick to USDT for trading.

Beware of leverage: both contracts and options have leverage, which can amplify your gains but also wipe out your principal in seconds.