#SpotVSFuturesStrategy

Spot vs Futures Strategy

Spot trading involves buying or selling an asset for immediate settlement and ownership. This type of trading offers simplicity, immediate exposure, no expiration date, and no leverage - making it ideal for those looking to participate directly in the market with less capital, although it exposes you to immediate price volatility.

In contrast, futures contracts use contracts to lock in a future delivery price. This strategy allows for leverage, hedging, and speculation in both rising and falling markets without the need for ownership. There are expiration dates, margin requirements, and higher risks - including the possibility of liquidation.

A composite approach: holding spot contracts for long-term exposure, and using futures to hedge or amplify short-term moves, balancing risk and flexibility.

This alignment between owning spot contracts and managing futures risk forms an effective strategy.