#MyTradingStyle

Future trading and spot trading are two different approaches to trading in financial markets.

*Spot Trading:*

- *Definition*: Spot trading involves buying or selling an asset for immediate delivery, with the transaction typically settled within a short period (e.g., 2 business days).

- *Characteristics*:

- *Immediate settlement*: Transactions are settled quickly, and the buyer receives the asset.

- *Physical delivery*: The buyer can take physical delivery of the asset (if applicable).

- *No expiration*: Spot trades do not have an expiration date.

- *Examples*: Buying Bitcoin on Coinbase, purchasing stocks through a brokerage account.

*Futures Trading:*

- *Definition*: Futures trading involves buying or selling a contract that obligates the buyer to purchase or sell an asset at a predetermined price on a specific future date.

- *Characteristics*:

- *Contract-based*: Futures contracts are standardized agreements with specific terms.

- *Expiration date*: Futures contracts have a specific expiration date.

- *Leverage*: Futures trading often involves leverage, which can amplify gains and losses.

- *Cash settlement*: Futures contracts are typically settled in cash, rather than physical delivery of the asset.

- *Examples*: Trading Bitcoin futures on a derivatives exchange, buying S&P 500 futures contracts.

*Key differences:*

- *Settlement*: Spot trading involves immediate settlement, while futures trading involves settlement at a future date.

- *Physical delivery*: Spot trading often involves physical delivery, while futures trading typically involves cash settlement.

- *Leverage*: Futures trading often involves leverage, which can increase potential gains and losses.

- *Risk*: Futures trading can be riskier due to leverage and market volatility.