#TradingTypes101 **Spot, Margin, and Futures Trading: Key Differences Explained**

### **1. Spot Trading**

Spot trading is like buying and selling assets in the real world—you own what you trade.

- **Example:** You have **100 USDT** and buy **SOL** at **SOL/USDT = 100**.

- You immediately receive **1 SOL** in your wallet, and **100 USDT** is deducted.

- **Pros:** Simple, no leverage, full ownership of assets.

- **Cons:** Limited by your capital; no amplified gains (or losses).

### **2. Margin Trading**

Margin trading lets you borrow funds to increase your trading position.

- **Example:** You have **10 USDT** but want to buy **SOL** at **100 USDT** (10x leverage).

- You borrow **90 USDT**, buy **1 SOL**, and pay interest on the loan.

- If **SOL rises to 150 USDT**, you sell, repay the loan, and keep profits.

- If **SOL drops sharply**, you may face a **margin call** or even **liquidation**.

- **Pros:** Amplified profits with leverage.

- **Cons:** Higher risk, interest on borrowed funds, potential liquidation.

### **3. Futures Trading**

Futures involve trading contracts, not the actual asset—you speculate on price movements.

- **Example:** You predict **SOL** will drop from **100 USDT**.

- You open a **100x SHORT** position with **10 USDT** (exposure: **1000 USDT**).

- If **SOL falls to 50 USDT**, you buy back at a lower price, repay the borrowed amount, and profit.

- **Pros:** No need to own the asset, high leverage available.

- **Cons:** Extremely risky, potential for rapid liquidation, no asset ownership.

### **Key Takeaways:**

- **Spot:** Own assets, low risk.

- **Margin:** Borrow funds, higher risk/reward.

- **Futures:** Trade contracts, highest risk (and potential reward).

Choose wisely based on your risk tolerance and trading goals! 🚀