In Binance (or any crypto exchange), Spot, Margin, and Futures trading are three different methods of trading cryptocurrencies, each with its own mechanics, risk, and purpose. Here's a clear breakdown of the key differences:
🔹 1. Spot Trading
What it is: Simple buy/sell of crypto at current market price.
Ownership: You own the actual cryptocurrency (e.g., BTC, ETH).
Leverage: ❌ No leverage (you trade only with your available funds).
Risk Level: Low (compared to margin and futures).
Example: You buy 1 BTC at $30,000. It’s stored in your wallet.
🔹 2. Margin Trading
What it is: Borrowing funds to trade more than your capital.
Ownership: You own the crypto, but it’s partially bought with borrowed funds.
Leverage: ✅ Yes (e.g., 3x, 5x – depending on the asset).
Risk Level: Medium to High (can lead to liquidation if the market moves against you).
Example: You have $1,000, borrow $2,000, and trade $3,000 worth of BTC.
🔹 3. Futures Trading
What it is: Trading contracts that speculate on the future price of crypto.
Ownership: ❌ You don’t own the actual crypto, just a contract.
Leverage: ✅ High leverage (up to 125x on Binance for some pairs).
Risk Level: High to Very High.
Settlement: Can be perpetual (no expiry) or fixed date.
Example: You open a long position on BTC/USDT perpetual contract with 20x leverage.
