#SpotVSFuturesStrategy
I approach Spot and Futures with distinct strategies and risk frameworks:
Spot Trading Strategies:
Long-Term Holding (HODL): Accumulating strong fundamental assets (e.g., BTC, ETH) during dips for anticipated appreciation over months/years. Focus is on ownership.
Swing Trading: Capitalizing on shorter-term (days/weeks) technical trends using support/resistance, RSI, and moving averages. Goal is profit from volatility without leverage.
Futures Trading Strategies:
Scalping: Exploiting tiny price movements (minutes/seconds) with high leverage for quick gains, relying heavily on order flow and Level 2 data.
Hedging: Using short futures positions to protect spot portfolios during anticipated downturns, managing systemic risk.
Arbitrage: Capitalizing on brief price discrepancies between spot and futures markets or across different futures expiries.
Risk & Position Sizing Management:
Spot: Risk is capped at the invested capital. Position sizing is typically a percentage of total portfolio (e.g., 2-5% per trade). Stop-losses are based on technical levels, but the absence of liquidation allows more tolerance for volatility.
Futures: Leverage is the critical differentiator, amplifying both gains AND losses. Position sizing must be drastically smaller (e.g., 0.5-2% of portfolio equity per trade) to account for leverage. Stop-losses are non-negotiable and placed much tighter to prevent liquidation. Calculating position size based on the maximum acceptable loss per trade (risk capital) relative to the stop-loss distance is paramount. Isolated margin is often preferred over cross-margin for defined risk.
Spot VS Futures Strategy requires respecting leverage's power in futures and adjusting capital allocation accordingly.