#SpotVSFuturesStrategy The "Spot" strategy and the "Futures" strategy are two main methods of trading in financial markets, and they have fundamental differences:
1️⃣Spot Trading
◀️Definition: It is the buying and selling of assets (such as stocks, currencies, commodities, or cryptocurrencies) at the current market price for immediate or near-immediate delivery. When you buy an asset in the spot market, you own it outright.
◀️Ownership: You gain direct ownership of the asset.
◀️Leverage: Usually, leverage is not used, which means you pay the full value of the asset.
◀️Risks: Relatively lower because you are not using leverage, and your losses are limited to the amount you invested.
◀️Simplicity: It is considered simpler and more transparent, suitable for beginners.
◀️Objective: To hold the asset for the long term or to realize profits from its price increase.
2️⃣Futures Trading
💫Definition: It is a contract between two parties to buy or sell a specific asset at a predetermined price on a specific future date. The asset is not directly owned, but the contract representing its future value is traded.
💫Ownership: You do not own the underlying asset; you own a contract.
💫Leverage: Allows the use of leverage, enabling you to control a larger amount of the asset with a smaller capital amount. This increases potential profits but also amplifies risks.
💫Risks: Much higher due to leverage, as losses can exceed the invested capital.
💫Complexity: Requires a deeper understanding of market mechanisms and financial derivatives.
💫Objective: Speculating on the future price direction of the asset, or hedging against price fluctuations. You can profit whether prices go up or down (through short selling).
