Bitcoin Forum

I have a few questions about trading

1: what is the different between spot trading and futures trading.

2:  between Stop Limit or Stop Loss and
 OCO or order cancel order which is the safest for trading.

3: At what level is overleveraging.

4: between spot trading and futures trading which is highly risk and highly reward that uses leverages.

Spot trading is the basic type of trading, a trader buy coins and sell it. For example, you can be able to buy bitcoin, if the price increase, can sell for a stable coin and wait for bear market to buy bitcoin again. If you sell bitcoin to buy tether which is a stable coin pegged with USD, you have nothing to lose but gain if the market is bearish. If you buy bitcoin and the market increase, you will gain. If the crypto exchange support your local currency in your country, you can use it to trade unstable coins like bitcoin too.

Future trading is different, you can use future trading to leverage, which means while trading future derivatives, you can borrow extra asset.

It can be in 2x up to nx while n depend on the maximum leverage available on the exchange you are using. On some exchanges, you can borrow 100 times of your coins which will be 100x but also depending on the coin as they can have different maximum leverage. The more you leverage the more the risk.

For example, you leverage bitcoin at $40000 with 5x, if you have $100, you will be able to trade future with $500 which is 5 times of your money. Trading fee is not deducted in my calculation, but it will be very small.

Bitcoin at $40000
Trading fee is not included
5x leverage
If you buy (go long), your position will be liquidated at $32000
If you sell (go short), your position will be liquidated at $48000

You can go long (buy) or short (sell) in future trading. If you go short and the market price is decreasing you are making money unlike spot trading. If you also go long and the market is increasing, you are making money. Elsewise are losses.

You can trade future derivatives with 1x leverage, which means you do not have to borrow to trade, you can use your real money.

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I have not used OCO before but stop limit order and stop loss are the same thing, some exchanges can name it as stop price order.

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I consider going more than 3x for bitcoin to be overleveraging, over 1x or 2x to be overleveraging for altcoins, altcoins are riskier. But it also depends on how professional a traders is, the market and the type of the future trading.

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You can use 1x for future trading too but if going more than 1x, future trading is riskier.

To be simple about what you have asked. Spot trading is just as simple as buy and hodl. The usual hodling of a coin either in your wallet or an exchange. You are suppose to buy low and wait to sell at your convenience on higher price. Here you don't lose the unit of your coin. That the unit of coin you bought is not lost only the value changes for higher or lower

Future trading include derivatives too. This is where real trading happens. You can lose your money. It is more risky. You buy or sell, you need a stop loss to avoid running out of balance.

Leverage is borrowed asset, money or coin to support your future trading. If you over borrow, it is risky. Sometimes 1-2 leverage or 1-1 ratio is better.

I think stop limit and stop loss are the same. Stop loss is simply to set a range to prevent your losses. Hope this can help you.

Stop loss, stop limit and stop price are all the same thing, but stop loss and stop limit are most commonly used on exchanges. Theoretically, that is the definition of stop loss, to minimize the loss that could have happened, but practically which all traders would have experienced before is that stop loss has its own disadvantage, the market can correct itself back to the opposite direction to favor a trader, but if stop loss was used, the stop loss order could have been filled.

Yes that is the disadvantage but check for how many traders that won't use stoploss and see how many times they will keep regretting of losing the balance or fund and try to recredit the account. If you don't use stoploss, you are likely to be losing your capital. Except there are other proven better ways to trade and be profitable than using stoploss.

That is true though but I only use stop loss when I leverage, I can consider using stop lose for 3x leverage or above, but for 2x and 1x I do not use stop loss.

If I open position for swing trading, that is definitely 1x or 2x and I do not consider to use stop loss. But traders will have different opinions about using stop loss or not but in most cases, I do not use it.

The main difference between spot prices and futures prices is that spot prices are instant buying and selling whereas futures contracts delay payment and delivery to a predetermined future date. Spot prices are usually lower than futures prices.

Spot trading involves buying or selling of an asset at the current price of the market. It's meant to be an instant delivery or on the "spot". While futures is a form of derivatives contract to sell/buy an asset at a specified future date.


Depends on your strategy.
Investopedia (https://www.investopedia.com/ask/answers/021015/what-difference-between-stop-order-and-stop-limit-order.asp) states it well


OCO is a conditional order that good if you are not so much around the trading charts or terminal

Obviously Futures trading is highly risky and rewarding, It depends on how good or lucky you are.

stoploss serves to assist us in anticipating the market if it is not in accordance with our analysis. wear or not I think the most important thing we must know the limits to exit the market. if we do not use a stop loss, we can use a cut loss if the market does not move according to our plan. all of these things are related to financial management, don't let daily trading turn into an investment, because the market involves a long time

Never touch and opening with future trading because there are not any chance keep exist your assets when wrong predicting, better as beginner you need to know all disadvantage with future trading and never make you sense when looking many trader show their profit from future trading. When you try with spot trading although price down and out from your predicting but still have chance with your money or assets still the same amount although have lower value only.

1. Spot trading is a basic trade for buying and selling. While trading futures, you can use leverage to borrow additional capital from the market.

2. Stop Limit is the safest way to trade because you can anticipate the worst that can happen based on where the market will move.

3. If your capital is small but you are forced to use higher leverage, it will risk losing because your profits and losses will be more pronounced.

4. In my opinion, spot trading is more profitable than leverage because you just wait for the price to move in the direction you want. While futures trading requires special skills to predict where the market will move so you can close your trade immediately. Futures trading can give you more risk than spot trading and it is not recommended for those who do not have skills to use future trading.

This is totally wrong, the price of spot trading is also different from the price of future trading because they are different market entirely but the trades of both spot and future trading can be filled immediately if market price is selected to close the trade or when the limit order price is reached.

Stop loss is good but I will prefer to use 1x leverage without stop loss, I am not a day type of trader, this may be the difference in our trading plan. We should follow what is working for us. In 3x or above leverage, using stop loss should be considered.

No delayed payments, mate. When you click Long/Short on a futures trade, at that time you pay the amount according to the "trading contract" with the leverage you place. And at that time the P&L will affect your futures account funds directly (depending on settings). And also there is no predetermined future date, the service only determines the "liquidation point" and "stop price point" at which your trading will be stopped automatically if you don't stop it manually.

As a beginner better to stick on spot trading and as move forward on your trading journey, you may venture onto futures but only risk your budget if you can afford to lose it. Always start small that you may handle it since futures trading isn't really for the faint of heart.

Futures trading isn't all the disadvantages though we can summarize that way but you can take advantage on it for example by always using stop-loss feature, take profit may it small or not (of course you need to have plan ahead on what level/percentage you'll get that profit), and I think you shouldn't be too emotional when trading futures always get ahead on the game plan and let that game plan speak rather your emotions or behavior.

Yeah, this has happened to me on a few occasions where I set a stop to losing limit and went away from the market only to return to see the market have done almost x2 price but my order was already filled when the market slid a little before jumping to the new high. We need to learn how to use and manage all these features to properly take advantage of them.

Basically, there are some differences.
- Spot trading is where you can hold your coins in your wallet even the price is going up and own, so it will depend on you to buy and sell the coins.
- Future trading is higehr than spot trading.
- Future trading, if you are a beginner and you don't about it yet, better to stay away, or it will turn into gambling only.
Read this:
https://www.binance.com/en/support/faq/360033162052

It will be a long answer. But actually, you can find the answer in more detail and specific here:
https://academy.binance.com/en/articles/what-is-an-oco-order
And you can dig deeper in the site about these several types of trading orders.

There's nothing wrong with asking what futures and spot trading are. This is where it all starts from a newbie's perspective about knowing the risk of futures and why shouldn't a newbie go with it.

But how can a newbie proceed and become experienced in it if he's not going to try it? Well, if you're really curious about making some trades through futures, the first thing that you need to remember is to only place an amount that no matter what happens, win or lose, you're not going to regret it.

Your first question, in my opinion the most complete and easy answer for you to understand, you can see here: Commodity Spot Prices vs. Futures Prices: What's the Difference? (https://www.investopedia.com/ask/answers/062315/how-are-commodity-spot-prices-different-futures-prices.asp)

And the second question option you can review here.
• How does a stop order and a stop limit order differ? (https://www.investopedia.com/ask/answers/021015/what-difference-between-stop-order-and-stop-limit-order.asp)
• What is a One-Cancels-the-Other Order (OCO) (https://www.investopedia.com/terms/o/oco.asp)

for question 3 I don't understand the question and for 4 the answers are already on pages 1&2.

I like answer only these 2 questions as these are same in my understanding.

Spot market is like trading with "current" market price whereas futures is about predicting the price of future times based on expiry date of contract.

Future trading us riskier one because you may avail leverage for your trading. If you trade futures with "no leverage" then you may remove the risk part from your trading still predicting future's price is somehow difficult which again adds risk factor to your trading.

                               Answers
The different between spot trading and futures trading is leveraging

OCO is the safest way to trade as it gives you a target and also preventing capital lost

Anything above 5x is overleveraging.

Futures trading because it is the crude oil for trading in crypto.

correct, but for me in my opinion i will never try that way because of curiosity especially if i don't know yet what are the big difference between spot and futures trading because it still a waste of money. Lol

I will prefer to make research in order to obtain more information since there are already some existing content about futures trading around the internet, wherein instead of risking some dollars in it.  :D

1. The difference between spot trading and futures trading is basically about what are the factors which are affecting the market price right now and in the future.

2. Stop-Limit is for buying higher than current price or for selling lower than current price. OCO is something new which is not available in my preferred paltforms.

3. In my opinion, anything which is not compatible as per your risk management then that kind of leverage could be coined like over-leverage.

4. Always highly risky one is highly rewarding. Like some people mentioned here, when you are going for no leverage then spot trading and futures trading may not be having any significant differences.

Hope you learn basic things if you already read the replies. Or you may simply use YouTube to learn trading and related stuff. Just want to add a thing about Future trading. Just think it's like gambling. Your balance would be Zero or multiply at any time. Means it's high risk and high return as well depending on your luck and predictions. If you want to play with luck then you may trade the future. Otherwise, spot trading is better to me at least the balance will not be Zero.

The primary distinction between spot pricing and futures prices is that although spot prices allow for immediate buying and selling, futures contracts postpone payment and delivery to a later date. Spot prices typically fall below futures pricing.