#SpotVSFuturesStrategy ⚖️ Spot vs Futures Trading Strategies
Feature/Aspect 🟢 Spot Trading 🔴 Futures Trading
Definition Buying/selling the actual crypto asset Trading a contract that bets on price
Ownership You own the coin (e.g., BTC) You do not own BTC—just speculate
Leverage Typically no leverage Offers high leverage (up to 100x)
Risk Level Lower risk (no liquidation) Higher risk (can get liquidated)
Time Horizon Best for long-term investments Best for short-term strategies
Profit from Falling Market? ❌ No ✅ Yes (can short BTC)
Use Case Holding, DCA, yield farming Scalping, hedging, arbitrage
🔵 Spot Trading Strategies
1. Buy and Hold (HODL)
Buy BTC and hold over months or years.
Low effort, long-term gains, based on conviction.
2. Dollar-Cost Averaging (DCA)
Buy fixed amount of BTC at regular intervals (e.g. $100/week).
Reduces impact of volatility over time.
3. Swing Trading
Buy at support zones and sell at resistance (using technical analysis).
Lower risk than futures, no leverage used.
🔴 Futures Trading Strategies
1. Leverage-Based Scalping
Use 5x–20x leverage to capitalize on small price moves.
Requires strict stop-loss and technical analysis.
2. Shorting the Market
Open short positions if you expect BTC to fall.
Popular in bear markets.
3. Hedging Spot Holdings
If you're holding BTC in spot, open a short futures position to offset temporary downside risk.
4. Funding Rate Arbitrage
Earn money by exploiting positive or negative funding in perpetual contracts.
Works when you simultaneously hold a long spot and a short futures position (or vice versa).
⚠️ Key Risks to Consider
Risk Type Spot Futures
Volatility Risk Price may drop over time Sudden price swings can liquidate
Leverage Risk None High — can lose entire capital
Custodial Risk Exchange hacks if funds on CEX Same as spot
Overtrading Risk Less common More common due to leverage appeal
🧠 When to Use Which?
Your Goal Use This Strategy
Build long-term crypto portfolio ✅ Spot (DCA or HODL)
Trade short-term price moves ✅ Futures (with tight risk control)