Spot vs Futures
Difference between directly buying crypto and contract trading with leverage.
Spot and futures are two fundamentally different ways of trading cryptocurrencies, with different risks and uses.
Spot trading:
•You buy actual crypto (BTC, ETH...)
•You take ownership immediately
•No leverage (or optionally up to 10x margin)
•No liquidation risk (can "hodl" and wait)
•Suitable for: long-term investors, beginners
Futures trading:
•You don't buy crypto, but a contract about future price
•Leverage up to 125x — amplifies both gains and losses
•Liquidation — position closes if you don't have enough margin
•Funding rate — periodic cost for perpetual contracts
•Suitable for: experienced traders, hedging
Key differences: | Aspect | Spot | Futures | |--------|------|----------| | Ownership | Yes | No | | Leverage | Up to 10x | Up to 125x | | Liquidation | No | Yes | | Funding | No | Yes | | Profit from decline | Harder | Short position |
Recommendation: Start with spot trading. Futures only when you fully understand the risks.