Spot Trading vs Margin Trading - Which is the best Strategy?

[el kaka22]

Before starting their journey in cryptocurrency trading, one of the major confusion that the traders have been facing every time is spot trading or margin trading & which one is suitable for us.

This cannot be a confusion for a beginner in trading. Misguiding . If a trader is good in knowledge then they will go for analyzing what are the pros and cons of going for margin trading. Only after gaining knowledge about all risks involved in margin trading, they might get confusion about choosing one out of these two type of tradings.

These are the two trading options given to the traders that you have to decide before begin your trading journey.

No traders should be given these two type of trading options in their beginning days itself. Every trader must start with spot trading and must gain sufficient experience in spot trading and only after finding comfortable with spot trading, they may think about getting into margin trading given that they are having good backup capital.

[CryptopreneurBrainboss]

Without any second thought the best and the most popular vote has to go to spot trading. It's the safest for anyone wanting to adventure into the world of cryptocurrencies trading and the features are quite easy to understand irrespective of you not having any prior knowledge of trading.

Spot simply has to do with the buying and selling of coins without any additional leverages in the simplest way possible which is perfect and serves as an advantage since you can easily turn into an investor by holding unto your coins if you made the wrong call but with margin trading, you get liquated the moment the market is moving against your call and you're in lost to a specific amount you won't be able to cover with your funds.

Margin trading should only be engaged by advance and experience traders as it has high risk written all over it. It isn't that simple too and can't be easily learnt without having some knowledgeable idea on what you intend doing.

[adaseb]

Without any second thought the best and the most popular vote has to go to spot trading. It's the safest for anyone wanting to adventure into the world of cryptocurrencies trading and the features are quite easy to understand irrespective of you not having any prior knowledge of trading.

Spot simply has to do with the buying and selling of coins without any additional leverages in the simplest way possible which is perfect and serves as an advantage since you can easily turn into an investor by holding unto your coins if you made the wrong call but with margin trading, you get liquated the moment the market is moving against your call and you're in lost to a specific amount you won't be able to cover with your funds.

Margin trading should only be engaged by advance and experience traders as it has high risk written all over it. It isn't that simple too and can't be easily learnt without having some knowledgeable idea on what you intend doing.

You are pretty much correct. Hence why when it comes to spot, margin, futures or options trading the best strategy is basically spot because it gives the least amount of chance to blow up your entire accounts. Look at how many people got liquidated in the last 12 hours who went long on bitcoin futures? Basically price went down $1000 in about 6 hours and anyone with a >10x leverage most likely got liqudiated and lost their entire accounts.

Hence why there are warnings after warnings when you try and open a futures again. They make you read so many terms and conditions because they want to protect themselves against being sued when you end up blowing an account and blame it on the exchange for your losses. So with a regular 1x leverage spot account you are less likely to get liquidated.

[TitanGEL]

I think the term "best" is subjective because we traders have different characteristics and skills and we cannot say that spot is better than margin or vice versa. I'm a spot and a margin trader when it comes to high reward, margin is good because I can borrowed funds there or what they called leverage but the thing is I do not use leverage more than 50x because for me it is risky and I can lose my capital easily with one wrong move. In spot trading it is good because I have more good risk management there, the only downside is we should not expect to huge gain in small period of time unlike in margin where in you can gain more than 100% in just minutes but still the risks are so high so you can also lose huge without proper knowledge in trading.

[samcrypto]

In short, margin trading is more profitable but on the other hand the more risk too.
Additional tip especially for newbies out there that may start to trade cryptocurrencies, I really suggest they will first start to trade in spot trading, which is more newbie-friendly, and learn first there before jumping in margin trading.

I’m not newbie anymore but I still prefer spot trading because of lesser risk and I control the money that I have, which I don’t need to borrow funds and take more risk. Margin trading is risky and can lose your money easily if you input the wrong key, so this is not advisable to newbies at all. Take a little step before taking too much risk, sometimes small steps are enough to achieve your goal.

[tvplus006]

Margin trading has one very important advantage over spot trading - it is to stay in the trade when the price falls. There are still many advantages of margin trading, but there is also one very big drawback - the possibility of losing your deposit if you trade incorrectly.

[Silberman]

Margin trading is not really a good option for the beginners so everyone should begin with spot trading and they can even keep doing the spot trading all the times because they are responsible for the profits and lose they are facing so they need to learnore to keep making profits.

What is interesting about the whole deal is that margin trading is for the most part promoted to newbies, and this is because exchanges know that most newbies will no take the time to make any research and as soon as they learn of the huge profits they can make they will be immediately attracted to it and will try their luck with it even when they do not have the abilities to survive for long, in a way I cannot blame exchanges since they are just trying to make money like any business but newbies need to learn that it is simply impossible for them to make those kind of profits on the markets and simply accept it instead of taking dumb risks that will eventually cost them all their capital.

[chip1994]

Before starting their journey in cryptocurrency trading, one of the major confusion that the traders have been facing every time is spot trading or margin trading & which one is suitable for us. These are the two trading options given to the traders that you have to decide before begin your trading journey. In the article, let's discuss spot vs margin trading, and also you can choose from it.

To Know More, Visit Here <> Spot Trading vs Margin Trading

In my experience, newbies should master margin trading before switching to spot trading.
Although margin trading is a very difficult subject and there are more than 90% of traders lose money in the first few years, it will help new traders practice many of the virtues needed to trade well.
Margin trading requires very high TA knowledge, besides having good discipline and emotional management, ... that will create a real trader. After being good at margin trading, you will make more money with spot trading. For me this is the best strategy to turn a bad trader into a professional trader.

[ChrisPop]

I don't just think, but I highly recommend that traders who don't have at least a few months of active trading in the markets do not use leverage trading aka margin trading.  It can be a career destroyer if you use it early, trust me. Or... at least you should document yourself and make minimum 100-200 trades on a demo account. There is no best strategy, it's about the risk you want to take and what kind of instruments you're trading.

If you are trading forex and especially on lower timeframes you have to use leverage to optimize your account, but keep it at a very low amount. Remember that even professional traders almost never go past 3-4x leverage.

[sana54210]

There is no doubt that spot trading is a better trading method, it is not even close to each other that we should compare the two of them.

Margin trading is something veterans of trading world does to make the most amount of money with the minimum input, hence why there are a lot of newbies who do not want to start out with big money that wants to make a lot of money that takes an interest towards it wrongfully and lose a lot of money in the end, or there are poor people who can't afford to make a decent return with spot trading because they are not putting up big capitals who get into margin trading in order to make something decent with the low amount they have but end up losing it all. Instead of these, just do spot trading and earn less but also not lose a lot, that is much better method.

[TitanGEL]

There is no doubt that spot trading is a better trading method, it is not even close to each other that we should compare the two of them.

Margin trading is something veterans of trading world does to make the most amount of money with the minimum input, hence why there are a lot of newbies who do not want to start out with big money that wants to make a lot of money that takes an interest towards it wrongfully and lose a lot of money in the end, or there are poor people who can't afford to make a decent return with spot trading because they are not putting up big capitals who get into margin trading in order to make something decent with the low amount they have but end up losing it all. Instead of these, just do spot trading and earn less but also not lose a lot, that is much better method.

Actually, it took me months before I decided to try spot trading. At first I really have hard time understanding the leverage system and it is actually funny because I watched a lot of videos in youtube just for me to understand it and I also spend a lot of time in reading different articles about it. But luckily I managed to understand it and I keep using it now, I do not suggest the margin trading especially for newbies because for sure they will easily burn their portfolios. The potential rewards are high but also the risks are high so the capital should be low or a money that you can afford to lose. I use VAR whenever I will enter in margin trading because value at risk can help me to identify on how much bitcoin that I will allocate in that certain trade.

[goaldigger]

Choose what's best for you since we all have different trading strategy so its possible that Margin trading is good for me but you see this one as not as good compare to spot trading. Traders must build your own ways of trading, don't listen to the noise of the public, stay focus and know what strategy to be used. I do spot trading always, and I tried Margin trading once but I can't handle the risk of it so I decided to stopped it.

[Yamifoud]

Choose what's best for you since we all have different trading strategy so its possible that Margin trading is good for me but you see this one as not as good compare to spot trading. Traders must build your own ways of trading, don't listen to the noise of the public, stay focus and know what strategy to be used. I do spot trading always, and I tried Margin trading once but I can't handle the risk of it so I decided to stopped it.

Choose the strategy that we think suited to us and being comfortable with.

That's right. A recommendation is just like that but at the end of the day, we have to make our decision that we think seems to be fair. Why not try them both and to know which one feels better and profitable? Of course, not all of them will work. This is not a challenge but would like everyone to experience and to finally have their own decision prior to the trading carrier.  

[Fredomago]

Choose what's best for you since we all have different trading strategy so its possible that Margin trading is good for me but you see this one as not as good compare to spot trading. Traders must build your own ways of trading, don't listen to the noise of the public, stay focus and know what strategy to be used. I do spot trading always, and I tried Margin trading once but I can't handle the risk of it so I decided to stopped it.

Choose the strategy that we think suited to us and being comfortable with.

That's right. A recommendation is just like that but at the end of the day, we have to make our decision that we think seems to be fair. Why not try them both and to know which one feels better and profitable? Of course, not all of them will work. This is not a challenge but would like everyone to experience and to finally have their own decision prior to the trading carrier.  

Make sense, what's makes you feel you comfortable with is the best one to proceed.
It's takes time learning both venues of trading strategies choose which one is best for you.

Traders always go for profits, taking risk is part of your everyday life around trading market picking up what's style
and what's  converting good benefits consumes time.

Having such options and see which is better will give you a much better chances to succeed from your trading engagements.

[celot]

I prefer spot trading to margin or futures trading. My mentality is not completely strong if you have to participate in margin or future trading because the risk is much greater than spot trading. In spot trading, at least our capital will not be liquid or scorched compared to margin or future if the predictions we use are wrong, especially I am a typical trader who is anti-cut loss when coins drop to low prices, I am optimistic that later if the bitcoin price rises it will have an impact on altcoins what I hold will also go up to a high price. It's different if you prefer futures or margins, if the prediction is wrong, our capital will run out and there will be no remaining at all, this is what causes me to be somewhat less interested in futures or margins.

[SquallLeonhart]

The main reason why people do not go with margin trading is the fact that it is not something you can learn in a day, it is not as simple as "buy low, sell high" because it is fast paced and it also requires a lot of your time as well, you can't just buy a long and leave your computer, or even if you have to at least you have to do it when you arrange everything to be handled with stop loss and cash out and basically all kinds of orders. Spot is not like that, you go and buy some and go live your days like nothing happens and you could still profit from it.

So, when you combine the risk involved, the time consuming part, the expertise and other aspects it becomes like margin trading is for niche part of trading and only applies to few people and not the general public.

[emmybd]

Spot trading is the method of purchasing or selling digital assets done in a limited timeframe, where delivery of your exchanged crypto will be done instantly.

Pros: Spot trading provides great risk management with its security system. https://www.koinbazar.com/ can help reap the benefits of the system. Additionally, only the balance you possess in your account will be lost.

Cons: With the concrete balance and risk management, not many opportunities can be begotten.

Margin Trading allows you to trade only a portion of your account balance to ordain the leverage of the position you are trying to enter. You can withdraw under your trade.

Pros: Margin trading comes to much avail to the trader when he intends to gain more profit. Exchanging with crypto, the user may trade as much as his investment allows them, and at a time, most suitable for them to receive a return on investment.

Cons: In Margin Trading, you can lose more than what you invested initially and chances are, all of your capital as well if you traded 100% of capital.

Bottomline
Margin and Spot Trading come with their drawbacks and prerequisites, so it’s up to the trader which prerequisites are more beneficial to his circumstances and which drawbacks are more negligible or negotiable. Along with enough knowledge and risk tolerance, he should make his judgment.

[nelson4lov]

In my opinion, The answer to the question  is pretty straightforward and it depends on the trader's knowledge and experience level.

For novice and beginners - Spot trading is the best option.
For seasoned traders - Margin trading

All forms of trading has risks. None of them are exempted from this. However, some happens to have more risks than others. For instance, in a regular spot thread, a 10% move in either direction is what it is - 10% increase/decrease depending on the direction of the movement. While for a margin trade, that 10% move is dependent on the margin level, say 3x for example. That would mean 3 x 10% equalling 30%.

That said, it is recommended to first get a taste of trading via spot trading and slowly move to margin with very low leverages and then move up the ladder as experience builds up.

[CryptopreneurBrainboss]

so I only advice people who are novice via trading to study effectively in order to make a better profits without ending up with multiple lost.

Both trading style could result to profit or loss and it all depends on how enlightening and lucky the trader is. Margin trading though is more profitable and can also be more dangerous in regards to losing. I think we're misinterpreting the question here. It isn't about preferability but the best.

There are many risk factors associated with margin trading that it won't be fair recommending it to the community as the best ahead of a less riskier option like spot trading that only put small percentage of your capital at risk especially if you have the stop loss option set up.

Speaking about how easy it'll be for both trading technique to be useful by a noob, the vote also has to go to spot trading since it's very straight forward.

[tvplus006]

Margin trading is not really a good option for the beginners so everyone should begin with spot trading and they can even keep doing the spot trading all the times because they are responsible for the profits and lose they are facing so they need to learnore to keep making profits.

I know such successful traders who only use spot trading. This is how they explain their successful trading that they do not use margin. However, trading on the spot market is comfortable if you have a large deposit that allows you not to use borrowed funds from the exchange. If you don't have such a deposit, you can't do without margin.