Spot vs Futures: Different Markets, Different Strategies ⚡📊
🟢 Spot Market
Nature: Buy and hold assets for long-term growth.
Strategy:
Dollar-Cost Averaging (DCA) – invest fixed amounts regularly, regardless of price.
Helps reduce impact of volatility over time.
Risk Profile:
Lower risk with no leverage involved.
Ideal for beginners or long-term investors.
Position Sizing:
Simple and based on how much you're willing to hold long-term.
No risk of liquidation.
🔴 Futures Market
Nature: Built for short-term speculation.
Strategy:
Use techniques like scalping, trend-following, or hedging.
Leverage can amplify both gains and losses.
Risk Profile:
Higher risk due to leverage and volatility.
Requires advanced risk management.
Risk Management Tips:
Always set stop-loss orders.
Use low leverage suited to your risk tolerance.
Risk only a small percentage of capital per trade.
Position Sizing:
Dynamic and closely tied to market conditions and risk tolerance.
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✅ Key Takeaway
Tailor your strategy to the market type.
Practice discipline, manage your risk wisely, and understand the unique dynamics of each market to trade confidently.