Which strategy to choose?
👉 Spot trading
Simple purchase: you buy a token and immediately own it. Did the price go up? You can sell and lock in the profit. Did the price go down? You can deposit it and calmly wait for the price to rise.
Risks: There is no leverage here, and you are not borrowing. There is a risk of buying a token whose price may fall. Study the market and the project you want to invest in. Don’t want to study? Buy Bitcoin 😉
Suitable for: Ideal for beginners and long-term investors.
👉 Margin trading
Here you borrow money from the exchange to increase the size of the trade. The funds in your margin wallet serve as collateral. This increases potential profits, but the risk of losses also increases.
Here you cannot hold the token for a long time and wait for the price. The exchange charges a fee for the loan, and there is a risk of liquidation if the asset price falls.
Risks: if you bought a token and its price falls, with borrowed money you lose more. If the balance reaches zero, the trade will be liquidated along with your entire deposit.
Suitable for: Suitable for those who are confident in their predictions and are ready for risk.
👉 Futures trading
You enter into a contract to buy or sell an asset in the future at a fixed price.
Long - if you think the price will rise,
Short - if you think the price will fall. This is a feature of futures - you can earn on the decline.
There is also the possibility to take a loan and increase profits (or losses). But you can do it without a loan, then the risks are lower.
Risks: if the price goes the wrong way, you start losing your deposit. Upon reaching a zero balance, the trade is liquidated, and you lose the invested funds. High leverage (loans) is especially dangerous; liquidation can occur very quickly.
Suitable for: experienced users who are confident in their predictions. It is necessary to be able to set stop-losses, analyze charts, and have the skill to control emotions.
My opinion: I don’t like risk and have never opened a leveraged trade. I believe I am still not ready (Eth bought in January at 3000 constantly reminds me of this 😂)
Question to experienced: How much time or how many trades are needed to relatively safely move to leverage?
