The difference between spot and futures trading strategy. #SpotVSFuturesStrategy

📍 Spot Trading

Definition: Buying or selling a financial instrument (like crypto, stocks, or commodities) for immediate delivery.

Settlement: Usually happens immediately or within a couple of days.

Ownership: You own the actual asset (e.g., BTC, ETH, gold, etc.) once the trade is complete.

Example: You buy 1 BTC on a crypto exchange today — you now own that BTC.

Pros:

Simple and easy to understand.

You get the asset right away.

No expiry or margin requirements.

Cons:

Tied to the current market price.

Can't profit easily from falling markets (unless using shorting strategies).

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📈 Futures Trading

Definition: An agreement to buy or sell an asset at a predetermined price at a future date.

Settlement: Happens on the contract’s expiration date, unless you close it earlier.

Ownership: You don’t own the asset — you're trading a contract based on the price of the asset.

Example: You enter a futures contract to buy 1 BTC at $60,000 in a month, expecting the price to rise.

Pros:

Can profit from both rising and falling markets (long or short).

Often uses leverage — small capital controls a larger position.

No need to hold the asset itself (good for commodities or crypto).

Cons:

Leverage increases risk — losses can exceed initial capital.

Contracts expire — timing matters.

More complex and requires more knowledge.

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