#SpotVSFuturesStrategy
Spot trading involves buying or selling an asset (like cryptocurrency) at its current market price for immediate delivery, granting direct ownership. It's straightforward, generally lower risk (no leverage), and ideal for long-term holding or beginners.
Futures trading, conversely, involves contracts to buy or sell an asset at a predetermined price on a future date. It doesn't involve immediate ownership but allows speculation on price movements. Futures offer leverage, amplifying both potential gains and losses, making them higher risk. They are often used for hedging or short-term speculation.
Combining strategies: Many traders use both. For example, a hedging strategy involves holding an asset in a spot market (long position) while simultaneously shorting futures contracts of the same asset. This can protect against downside price movements in the spot holding. Another approach is arbitrage, exploiting price discrepancies between spot and futures markets to profit from imbalances.