Spot Trading Vs Futures Trading: Which One Should You Go For
In the world of crypto trading, there are a whole lot to actually explore and come to realise of. In fact I have come to discover that one needs knowledge in order to be able to thrive in the world of trading and that is the mistake a lot of us actually make. Well as we all know, there are actually two types of trading in the world of crypto trading which are spot trading and futures trading.
Today I will actually be talking about each one of them and we will compare both together so stay tune as you read below.
Brief introduction to Crypto Trading
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Now let's first start with crypto trading introduction so as my readers can be on the same page so stay tune. As we all know, crypto trading deals with the buying and selling or exchanging of digital assets using platforms or exchanges rather. Under the world of crypto trading, we have two major types which we are familiar with. One is spot trading and the other one is actually future trading also. Today I will be discussing about each of them actually.
Let's Talk About Spot Trading
Now when we talk about Spot Trading in the world of crypto trading, we mean it is the buying and selling of Cryptocurrencies. This types of trading actually deals with the exchange between buyers and sellers been direct. It is the actual exchange of the digital assets. When it actually comes or involves spot trading, transactions are actually executed instantly and not only that but the buyers actually have that ownership of that cryptocurrency in which they can now hold for a long period of time as they want. The trades when it comes to spot trading is direct and that is through a cryptocurrency exchange actually.
Talking about the benefits of Spot Trading, it is actually so easy to understand and execute and thereby it's making it even easy to understand even for beginners. The fact that traders have that ownership of the particular crypto they bought also goes a long way to serve as the benefits and it is so transparent as transactions can really be seen vividly.
Now the same way it actually have a lot of benefits, it also have a whole lot of risks attached to it. The first one actually is the fact that it is highly volatile. As we all know the crypto world is so volatile and thereby it can witness a significant losses for the traders. Not only that when it involves spot trading, it is really subjected to market manipulation by the so-called whales.
As I conclude in the section of Spot trading, it is quite evident that spot trading is the straightforward method of trading cryptocurrency even till today because it actually involves the direct exchange of the digital assets. But in as much as it actually has its own advantage, it also has its own disadvantages which they need to deal with actually also and that is why rigid risk management needs to be out in place.
Let's Talk About Futures Trading
Now when it actually comes to Futures trading in the world of crypto, it means you actually predicting or speculating on the future price of a crypto token. In this aspect, you don't actually own the crypto you are speculating on. This deals with contracts when it comes to these issues for a price and a date.
Now when it actually deals with the futures trading, it has some basic concept which includes something called the future contracts. This actually means agreement to either buy or sell the assets for a future price and for a future date. Not only that, there is a concept called the leverage that is also used in future trading. Leverage allows traders to actually control larger positions compared to their amount.
When it actually comes to future trading, the risk involves are actually the volatility risk and the leverage risk. In futures trading, there is high Volatility of the crypto which in turn can actually affect the value of futures contracts. Not only that the leverage risk also exists which can work against the trader that at some point can result in large losses.
In as much as futures trading In crypto can actually offers opportunities for huge profits, it also comes with it's own risk that if not actually well managed can result to a huge loss at the end of the day. Everything needs to be balanced.
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I think it is better to stay away from Future trade as chances of losing money are high, so Spot trade is better
Greatly written on spot and futures trade, for me though I will prefer futures trading, the idea of participating in the crypto trading without owning the underlying asset kind of protects one from risk of crypto volatility, well if you are experienced enough then go for futures ifnot stay in the safe hands of spot trading
I also think we should go to Futures Trading. Because everyone is waiting for something more or less good. I enjoyed reading your post. Everyone was asked to choose one of the two options. Everyone wants to move forward through their own efforts.