#SpotVSFuturesStrategy Here’s a detailed breakdown of spot vs. futures strategies, focusing on risk, capital efficiency, and professional tactics
🔍 1. What Are You Actually Trading
Spot: You buy/sell the real asset at today’s price, assuming immediate custody and full exposure.
Futures: You trade a contract based on the future price, with no real asset until settlement. These contracts can be perpetual (no expiration) or dated.
💰 2. Leverage & Risk Profile
Spot: Uses 1:1 capital—no leverage, so losses are limited to what you invest.
Futures: Vast leverage (from 1× to 100× or more), allowing large positions with little capital—but also increases risk, including margin calls and liquidation.
🎯 3. Strategic Objectives
A. Speculation & Directional Bets
Spot: Bet on price increases—safe, simple, but with no possibility of short selling.
Futures: Go long or short based on expected price movements—ideal for tactical plays.
B. Hedging
Companies or investors can short sell futures to offset underlying exposure, or go long to lock in purchase costs.
C. Spread & Basis Trading
Trade the basis (spot price – futures).
Short the basis: short sell futures + buy spot—used by producers to hedge against downturns.
Cash-and-carry: buy spot, sell futures; you profit when they converge.