Mainly reflected in trading nature, risk structure, applicable scenarios, etc. Below is a comprehensive comparative analysis:
I. Essential Differences
1. Leverage trading
Nature: an extension of spot trading, borrowing coins from the platform by pledging assets to amplify principal, actually holding the underlying assets (such as BTC, ETH).
Operation: need to borrow funds to pay interest (calculated daily), trading completed in the spot market.
Example: pledge 100 USDT to borrow 900 USDT, buy BTC with 1000 USDT, actually holding BTC spot.
2. Contract trading
Nature: derivative trading, buying and selling standardized agreements (such as futures, perpetual contracts), does not involve actual asset delivery.
Operation: predict price fluctuations through margin, no borrowing interest, but need to pay transaction fees and funding rates (perpetual contracts).
II. Applicable Scenarios and Strategies
1. Leverage trading is more applicable:
Long-term bullish on certain assets, hoping to hold spot and amplify returns.
Participating in staking mining, IEOs, etc., requiring actual holding of coins.
Risk warning: borrowing interest may erode profits, need to pay attention to the collateral rate to avoid forced liquidation.
2. Contract trading is more applicable:
Short-term swing trading or hedging spot risks.
High leverage to capture trending markets (such as one-sided surges/drops).
Risk warning: high leverage can easily lead to liquidation, the funding rate of perpetual contracts may continuously consume principal during sideways periods.
III. Selection Recommendations
- Beginners prefer stability: start with low leverage (≤5 times) to avoid high volatility risks in contracts.
- High-level strategy demand:
Arbitrage: utilizing the price difference between contracts and spot (such as basis arbitrage).
Trend trading: high leverage in contracts amplifies one-sided market returns.
- Platform selection: prioritize mainstream exchanges (such as Binance) to ensure liquidity and sound risk control mechanisms.