In cryptocurrency trading, there are three types of trading methods: spot, leverage, and contract, which have essential differences in asset ownership, sources of leverage, settlement mechanisms, and risk structures.

1. Spot Trading

- Core Logic: Immediate buying and selling of actual assets

- Leverage and Risk:

- Leverage Ratio: 1x (no leverage)

- Maximum Loss: Principal goes to zero (when the coin price drops to 0)

- Typical Scenario:

> Buy 0.025 BTC with 1000 USDT, if BTC rises to 45,000 USDT, profit is 125 USDT (25% increase).

2. Leverage Trading

- Core Logic: Using spot assets as collateral to amplify principal through borrowing

- Leverage and Risk:

- Leverage Ratio: 2-100x (platform-set limit)

- Liquidation Mechanism: When the value of collateral assets ≤ borrowed principal + interest, automatic liquidation is triggered.

- Maximum Loss: Can exceed principal (risk of liquidation is low, but borrowing gap needs to be covered).

- Case:

> Use 0.01 BTC (worth 400 USDT) as collateral to borrow 800 USDT, total funds 1200 USDT to buy BTC.

> If BTC rises by 25%, profit is 300 USDT (75% return); if it drops by 20%, loss is 240 USDT triggering liquidation.