Key differences between spot, margin, and futures trading:
👉Spot Trading, Margin Trading, and Futures Trading:
Spot Trading
* What it is: Buying and selling assets directly at the current market price with immediate delivery.
* Ownership: You own the asset.
* Leverage: Not used (1:1).
* Risk: Limited to what you invest.
* Ideal for: Long-term investors and beginners who want to own the asset without leverage.
👉Margin Trading
* What it is: Trading with borrowed money to increase the size of your trades.
* Leverage: High (e.g., 5x, 10x), magnifying gains and losses.
* Risk: High, you can lose more than your initial deposit.
* Ideal for: Experienced traders looking to amplify gains on short-term price movements.
👉Futures Trading
* What it is: Agreements to buy or sell an asset at a future date at a predetermined price. You do not acquire ownership of the asset.
* Leverage: Very high (50x, 100x or more).
* Risk: Very high due to extreme leverage and volatility.
* Ideal for: Advanced traders looking to speculate on future prices (up or down) or hedge.
When to use each one?
* Spot: If your goal is to hold the asset long-term and minimize risk.
* Margin: If you are an experienced trader and want to maximize exposure in fast market movements.
* Futures: If you are an advanced trader looking to speculate on price direction without owning the asset, or to protect against adverse movements.
👉Tips for Beginners
Always start with spot trading. It is essential that you learn to manage risk, use stop-loss to limit losses, avoid excessive leverage, and keep your emotions in check. Always educate yourself and, if possible, practice with a demo account before risking real money.