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 Futures Trading or Spot Trading: Which Should You Go For?

Futures Trading or Spot Trading: Which Should You Go For?

You can do different things once you’ve credited your wallet when it comes to cryptocurrencies. Depending on what you enjoy, you can decide on betting Vegas NFL odds, NBA games, Soccer, etc. In that case, you can grow the value of your asset, which will help you become part of the crypto world and an earner.

Aside from betting, there are other ways to start earning with your cryptocurrencies. You can stake your coins, engage in lending, or put it in a vault to receive interest over time.

Depending on what you prefer, you can choose the type of low-risk option to follow. That way, you’ll earn money without risking much.

However, if you want to increase your chances of winning more, you can engage in a more risky activity. You can start crypto trading, a perfect way to earn plenty of money if you do it right.

However, it comes with huge risks and can make you lose your money. There are different trading activities to choose from, and the most popular ones are futures and spot trading.

Both trading activities are exciting, and they promise a chance to increase your asset value. In that case, you can decide to go with either one. However, many newbies are constantly torn between which one to go for and if there is anyone that offers a better guarantee compared to the other.

You should know that both are risky, and you can only get a profit whenever you make the right trade. Therefore, you have to ensure that you have a proper strategy to help you complete your trade. So, if you’re looking for which trading type you should go for, here is a guide to breakdown futures and spots trading.

Table of Contents

An Overview of Both Types Differences and Similarities

Both trading types have slight differences, offering varying ways to trade the popular markets—one of the significant differences in their expiries and costs. The spot markets come with overnight fees and low spreads to put this into context. On the other hand, the Futures Market doesn’t have any overnight fees but comes with higher spreads.

Any futures trade expires on a particular date, making spot trading better suited for day traders. Meanwhile, futures trading works perfectly for long-term traders. However, they are also similar because you have to trade them using leverage. In that case, you’ll need to deposit a percentage to begin.

The money you deposit is referred to as the margin. Although the margin reduces the entry cost of any trade, it increases the losses and profits, meaning that you can lose more than you deposited as you can gain more. Therefore, both trading types are risky, and you’ll have to learn how to manage your risk.

Futures Trading

To explain futures trading in lay terms, you should know that it is a quote for a contract getting executed at a point. In this case, you’re trading various contracts representing a specific cryptocurrency value.

Therefore, you don’t own the base assets when you buy a futures contract. What you own is a contract to buy or sell the asset at a specific date.

It is a tool to speculate on the future prices of a particular cryptocurrency. Therefore, you can take advantage of price volatility, whether it rises or falls.

It is similar to placing a Totals bet on a match at any top betting site like Bet US before the match is played. And if you’re right, you’ll win. But if you’re wrong, you lose.

Spot Trading

On the other hand, Spot Trading is buying and selling assets or immediate delivery. In this case, the cryptocurrency is transferred from the buyer to the seller. Unlike futures trading, you’ll have direct ownership of the assets you buy.

As a result, you’ll have legal rights like stake participation. Therefore, the market fluctuation would affect the value of your assets.

Depending on what you know, different exchanges let you conduct different transactions, such as fiat-to-crypto and crypto-to-crypto. Once you buy an asset, the value will follow the market as it rises and falls, and at the end of the day, you can sell it either at a high price or lower price, depending on its value at the time.

Our Thoughts

There are many ways to make money with crypto in your wallet. You can use it to fund a sportsbook such as BetUS, and you can earn money as your stake on games.

Aside from that, you can try spot or futures trading. However, you should understand both types before you jump in so that you don’t lose your money.

Richard Ellis

Richard Ellis

Richard Ellis is a Eurogamer reporter who is interested in streaming, people and communities, and providing marginalized individuals a voice.
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