š Futures vs. Spot Trading: The Hidden Relationship Most Traders Ignore or don't fully understand ! š
Many traders misunderstand the deep connection between Futures and Spot markets. Hereās the reality:
When a trader buys Spot, they own the asset outright. But when another trader buys Futures, they are simply speculating on the priceāleveraged and ready to exit fast once their target is hit.
š If a Futures trader goes long (buys) and later closes their position (sells), they take profits and leave, removing liquidity. This causes the cost price to drop, leaving Spot investors with lower prices.
š If a Futures trader shorts (sells first, buys back later), it adds downward pressure, accelerating the drop.
This cycle affects liquidity, volatility, and overall price movementsāyet many fail to see how Futures traders influence the entire market dynamic.
š Understanding this relationship is key to making smarter trades. Are you factoring Futures movements into your Spot trading strategy? š¤