#SpotVSFuturesStrategy
đż 1ď¸âŁ What is Spot Trading?
Buy/sell crypto immediately at the current market price.
You own the actual asset (BTC, ETH, etc.).
No expiry, no liquidation risk.
Profit only if price increases (or decreases if you sell what you own).
Example:
Buy 1 BTC at $110,000.
Sell at $120,000 â Profit = $10,000.
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⥠2ď¸âŁ What is Futures Trading?
You trade contracts to buy/sell crypto at a future price.
Can long (buy) or short (sell) without owning the asset.
Uses leverage (e.g., 5x, 10x) to increase position size.
Can profit in both rising and falling markets.
Carries liquidation risk if the market moves against you.
Example:
Long 1 BTC at $110,000 on 10x leverage.
Price goes to $120,000 â Profit = $10,000 x 10 = $100,000 (minus fees).
If price drops to $108,000 â May get liquidated depending on margin.
â Spot Trading Strategy:
1. Buy low, sell high.
2. Ideal for long-term holding and lower risk.
3. Use Dollar Cost Averaging (DCA):
Buy fixed amounts regularly regardless of price to reduce volatility risk.
4. Use stop-loss if you want to limit downside in volatile markets.
â Futures Trading Strategy:
1. Identify clear trends using indicators:
Moving Averages (50/200 MA crossovers)
RSI (overbought/oversold zones)
Support/resistance levels.
2. Use lower leverage (1x-5x) if you are a beginner to reduce risk.
3. Set strict stop-loss and take-profit levels:
Never trade without them to avoid liquidation.
4. Hedge spot positions:
If you hold BTC, you can open a short futures position during a downtrend to protect your portfolio.
5. Focus on risk management:
Never risk more than 1-3% of your capital per trade.
đť Risks Comparison
Aspect Spot Futures
Ownership Own the asset Contract only
Risk Low High
Liquidation No Yes
Leverage No Yes
Profit in downtrend No Yes (via shorting)
Best for Long-term Short-term, hedge, advanced traders.
