#SpotVSFuturesStrategy
Comparison of Futures vs Spot Trading Strategies
- It is very important for traders to adjust their style and investment goals. Here is the explanation and comparison of the strategies:
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🔹 1. Spot Trading Strategy
Spot = buy/sell assets directly at the current price, to hold or resell.
✅ Advantages of Spot:
No liquidation risk.
More suitable for long-term investment.
Can be stored in a wallet (e.g., crypto).
⚙️ General Spot Strategies:
1. Buy & Hold (HODL)
→ Buy assets when the price is low, hold long-term.
2. Swing Trading
→ Take advantage of price movements on a weekly/monthly basis.
3. DCA (Dollar-Cost Averaging)
→ Buy regularly with a fixed amount, regardless of price increases/decreases.
4. Breakout Strategy
→ Enter when the price breaks through important resistance.
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🔸 2. Futures Trading Strategy
Futures = contract to buy/sell assets in the future with leverage (margin).
✅ Advantages of Futures:
Can Long (price up) & Short (price down).
Potential for greater profits with leverage.
Suitable for day trading or scalping.
⚠️ Risks of Futures:
There is a risk of liquidation if the direction is wrong.
Requires strong risk management.
⚙️ General Futures Strategies:
1. Scalping
→ Quick entry-exit (minutes) with small targets.
2. Leverage Breakout/Breakdown
→ Use leverage when the price breaks out of the consolidation zone.
3. Shorting Strategy
→ Look for profit from price declines.
4. Hedging
→ Protect spot assets with opposite futures positions.
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📊 Comparison Table of Strategies
Aspect Spot Futures
Capital Full (without leverage) Can be small (using leverage)
Risk Lower High (liquidation)
Market Direction Up (long only) Up & down (long & short)
Suitable For Investors / swing traders Active / daily traders
Risk Management Simple Complex, requires SL
Asset Storage Can be stored (wallet) Not stored, only contracts