#TradingTypes101
Here’s your #TradingTypes101 guide—covering the main ways you can trade in both crypto and traditional markets:
⸻
🟢 1. Spot Trading
• What it is: Buying or selling the actual asset outright (e.g., buying ETH or BTC).
• Why it matters:
• Zero margin or leverage—what you buy, you own.
• Great for long-term investing or simple trades.
• Examples:
• Stocks: Buying Apple shares via a brokerage.
⸻
🟡 2. Margin Trading
• What it is: Borrow funds (or crypto) to trade a larger position than your capital allows.
• Pros: Increases potential returns.
• Cons: Also magnifies losses; risk of margin calls/liquidation.
• Typical use: Traders using 2–5× leverage on platforms like Binance, Kraken, or Indian exchanges such as WazirX.
⸻
🔴 3. Futures Trading
• What it is: Trade contracts that settle at a future date; you speculate on price moves rather than owning the asset.
• Types:
• Perpetual futures (no expiry)
• Delivery futures (fixed expiry, like monthly contracts)
• Pros:
• Use high leverage (up to 100× in crypto).
• Profit in both rising and falling markets (via long or short positions).
• Cons:
• Complex (funding rates, rollovers).
• High risk of rapid liquidation if misused.
• Platforms: Binance Futures, Bybit, FTX (now defunct but remember historical context), CME for institutional traders.
⸻
⚪ 4. Options Trading
• What it is: Buy the right, but not the obligation, to buy (call) or sell (put) an asset at a set price before a certain date.
• Pros:
• Can define your maximum loss (only premium paid).
• Versatile strategies: hedging, income generation, speculation.
• Cons:
• Requires understanding of options pricing (time decay, implied volatility).
• Platforms: Deribit for crypto options, traditional brokers for stock options.
