#TradingTypes101

There are mainly three types of trading: Spot, Margin, and Futures.

1. Spot Trading

In spot trading, there’s no leverage involved. You simply buy an asset at a low price and sell it at a higher price. The profit is the difference between the buying and selling price (after fees).

This type of trading is beginner-friendly and considered halal (permissible in Islam) because you actually own the asset.

2. Margin Trading

Margin trading involves borrowing funds to increase your buying power, also known as leverage. It can lead to higher profits, but also higher risks.

It’s not recommended for beginners, as losses can be significant and may exceed your initial investment.

3. Futures Trading

Futures trading doesn’t involve owning the asset itself. Instead, you enter contracts to speculate whether the price will go up or down in the future.

It’s a high-risk strategy suited for experienced traders, and involves betting on price movements, rather than actual asset ownership.