Long term investing - Spot, Margin or Derivatives?

[loll_l]

I'm one of those idiots who invested in a bunch of coins/tokens at the top and lost a load of money - around $35k in total 

I sold all of my coins/tokens a few months back but I will be reinvesting in numerous difference projects again when, or if, BTC goes down to $14k - which I believe will be somewhere close to the bottom.

Since losing the $35k I started trading using ByBit Derivatives and it's helped me to understand the whole crypto scene a lot more. I lost another $5k when I first started trading but since then I've done pretty well (mainly shorting) and I reckon I'm now around $2-3k up with the trading in total. I'm still massively down overall since getting into crypto though

Anyway, regarding long term investing and whether I should use Spot, Margin or Derivatives... My plan is to invest in loads of different coins/tokens but if we just use BTC as an example...

EXAMPLE

If I purchase $1000 of BTC using the ByBit Derivatives pair BTC/USDT (i.e. using USDT to purchase the BTC) and I buy the BTC when the price is at $14k using a leverage of 2x, please can someone tell me if I've understood the following scenarios correctly:

1 - If, in a years time, the BTC price goes up from $14k to $56k, that would mean the price has multiplied by 4. That being the case, my investment of $1k USDT which I leveraged at 2x (so effectively invested $2k) will go up to $8k, resulting in $7k profit... Have I understood this correctly?

2 - If conversely the price of BTC goes down from $14k and I do not put in any kind of stop loss, at 2x leverage I estimate my liquidation price would be roughly half of $14k so around $7k (maybe just over)... is this correct?

3 - If I've understood both the above scenarios correctly, what is the benefit in using Spot or Margin? It seems to me that Derivatives does exactly the same as Spot and Margin with the added benefit of additional leverage if required! Is that not right?

[1714722137]

1714722137

[hd49728]

Long term investment is not related to Spot, Margin or Derivatives.

When you invest long term, you must keep your coin in your wallet, not on exchange. If you mean Spot, Margin or Derivatives, you must store your coin at exchanges. That is bad in security for your coin and capital.

In addition, if you invest and store your coin at exchange, you can easily to go with trading because it is very convenience to trade on exchanges. Then you will change from long term investment to trading and it is bad.

[loll_l]

Long term investment is not related to Spot, Margin or Derivatives.

When you invest long term, you must keep your coin in your wallet, not on exchange. If you mean Spot, Margin or Derivatives, you must store your coin at exchanges. That is bad in security for your coin and capital.

In addition, if you invest and store your coin at exchange, you can easily to go with trading because it is very convenience to trade on exchanges. Then you will change from long term investment to trading and it is bad.

Thanks for the advice but these are only hypothetical queries so when reading them please imagine, hypothetically, that wallets don't exist and exchanges are the only place to hold crypto.

[Oshosondy]

I sold all of my coins/tokens a few months back but I will be reinvesting in numerous difference projects again when, or if, BTC goes down to $14k - which I believe will be somewhere close to the bottom.

There are different strategies that you can use. You can DCA, you can also wait until the price you want is achieved, but bitcoin may never get to $14000. If you do not DCA and bitcoin has not gotten to $14000 some weeks before halving, I will advice you to just invest.

Since losing the $35k I started trading using ByBit Derivatives and it's helped me to understand the whole crypto scene a lot more. I lost another $5k when I first started trading but since then I've done pretty well (mainly shorting) and I reckon I'm now around $2-3k up with the trading in total. I'm still massively down overall since getting into crypto though

Derivative trading is very risky, best to get specific coins like bitcoin for it. Some traders would trade shit coins and continue losing, know that altcoins are more volatile, if you increase the margin ratio, it won't be good.

You are now patient, just do not trade, best to just hold which is better. You can leave the coin after you buy it until 2025.

Anyway, regarding long term investing and whether I should use Spot, Margin or Derivatives... My plan is to invest in loads of different coins/tokens but if we just use BTC as an example...

I will have to say this again, do not use derivative trading for altcoins, than to long it and not using more margin ratio, the best is to even buy them, move them to your noncustodial wallet.

[rhomelmabini]

1. I think there is calculator on their site or app, might be best to use it or using this excel sheet that is downloadable here (will just code it so it wouldn't be mistakenly clicked by anyone):

Code:

https://www.ministryofmargintrading.com/bybit-calculator

2. Same as to number 1, the calculator will be best here since for a year that would occur lot of fees too on your open position.

3. Saying benefits is subjective, personally, for me, Spot has low risk compare to what does margin do but if you're correct on your position then it's totally profitable. They're apple and orange, same to be labeled as fruit but they definitely have differences.

[Lucius]

I'm one of those idiots who invested in a bunch of coins/tokens at the top and lost a load of money - around $35k in total 

I sold all of my coins/tokens a few months back but I will be reinvesting in numerous difference projects again when, or if, BTC goes down to $14k - which I believe will be somewhere close to the bottom.

The ground you walk on is slippery, and just when you think you are standing stable, you slip and fall. Getting up is of course a difficult process, especially for those who cannot afford to lose $35k and start all over again. However, I would emphasize here that the key thing is to learn from your mistakes, and although I generally understand the need of some investors to invest in "numerous difference projects", I cannot escape the impression that they are making the same mistake again and again.

9 out of 10 such projects will fail in the long term (in less than 4 years), so it all boils down to the perfect timing of when to buy and when to sell. Everything else is speculation, including the fact that the price of Bitcoin must fall below $15k, which is not impossible, but there is also a high probability that it will not happen.

[maydna]

Based on the title you made, long term investment means that the investment you buy is not used for any other reason except for holding it for a certain period so you have to hold it without being used for trading.

I don't think it has anything to do with spot, margin or derivatives because investing means holding, as I said. This benefits many people who do not master trading, especially in analyzing market movements to avoid mistakes.

[Inspiron14]

Investment for the long term which I think is very safe and comfortable of course I choose to invest in the Spot Market and choose the Binance platform to hold altcoins there,
I choose the Spot market because I'm used to trading there, and for derivatives and margin I still don't understand it, it's just that it's a little more complicated.

[Findingnemo]

Don't add such leverage to your long term trading capital which simply add the risk and it may lead you to close at the wrong position and ends up wrecking again. So just spot trading is good and you will have all your assets on your wallet and comparatively less risky. So as you said in the example you still can make 300% return if Bitcoin reaches new ATH which is too good in practical terms.

[batang_bitcoin]

If you don't know what's the purpose and how to use margin, just don't get your hands on it. The farther, the better and if you're into long term investing.
It's all about just keep on holding and it's up to you on how long is that hold you'll do. Because, you can just put it on a wallet, where you're holding the keys.
Unlike putting it on an exchange like what you're planning to, you don't hold the keys there.

[The Cryptovator]

Since you lost a lot I will prefer long time investment. So hopefully once a time you can recover your lost funds. It's normal when people enter first time in crypto they lost a lot due to no experience with the crypto movement. Who thought Bitcoin would be below $20K? Everything is possible in cryptocurrency, we don't know where is the exact bottom. But you shouldn't be selling your holding in too much loss. What is the benefit then if you can't hold a longer? Once dump means dumped, have to wait for recovery. Because you already lost, it won't be recovered if you sold. But you have to choose the right coin, not a shit coin or pump dump coin. That's how you will be lost your portfolio too quickly.

[lalabotax]

I'm one of those idiots who invested in a bunch of coins/tokens at the top and lost a load of money - around $35k in total 

I sold all of my coins/tokens a few months back but I will be reinvesting in numerous different projects again when, or if, BTC goes down to $14k - which I believe will be somewhere close to the bottom.

So sorry to hear that. But as your experience, not all projects are valuable and survive to have a brighter future. Many are shit projects or scam projects. That is why I personally always avoid new projects, moreover that have not been listed in any exchanges or listed on DEX or low cap exchanges that only utilize the pump and dump process. this is high risk.
It is true also that we need to diversify our money into several coins investment. But it doesn't mean that we must invest in numerous shit coins.
It is better to invest in Bitcoin at first, and top coins. At least, we can decrease the risks. However those top coins are also valuable for long-term investment, althoguh right now the price still decreasing, but I beleive that this will be able to rise up in the future.

[goaldigger]

Investment for the long term which I think is very safe and comfortable of course I choose to invest in the Spot Market and choose the Binance platform to hold altcoins there,
I choose the Spot market because I'm used to trading there, and for derivatives and margin I still don't understand it, it's just that it's a little more complicated.

Binance is a good exchange but for long term purposes, it is still good to have it on your own hard wallet which you can have the control, and away from any institution which might affect your investments later on. Though if we are talking about long term trade here, I mean for just months then spot trading is really the safe option. Your profit for long term is also not guaranteed, so make sure to buy only the good coins for your long term purposes.

[Oneandpure]

Which one trading kinds do you wanna try despite your decision with short or long term trading, I saw you try leverage of 2x and looks want to trade on future trading, I don't think most recommended way exactly with long term with future trading because you have pay fund fees with this kind trader. Have promising with much profit earn than spot trading but I don't think long term holding need pay fund fees in future trading, better if try with long term trading better with spot only without try with future trading have bigger risk if suddenly miss out from your price predicting, although you try to open long position with bitcoin.

Spot trade have less risk because your investment funds as bitcoin keep safety without paying fees every days different when your use future as your long term investing. However when price drop from your invested still have bitcoin assets although values drop, different with future you will get notice with liquidation and loss all your bitcoin investment.

[GelatikKembar]

Investing in cryptocurrencies is of course very convenient to do through the spot market,
I'm sure 99% of people in this world will also make purchases in the spot market and store them in a wallet,
whether it's a hardware wallet or a software wallet. For sure Spot market is the first and easiest choice to buy Bitcoin and altcoins.

[tvplus006]

Long term investment is not related to Spot, Margin or Derivatives.

When you invest long term, you must keep your coin in your wallet, not on exchange. If you mean Spot, Margin or Derivatives, you must store your coin at exchanges. That is bad in security for your coin and capital.

In addition, if you invest and store your coin at exchange, you can easily to go with trading because it is very convenience to trade on exchanges. Then you will change from long term investment to trading and it is bad.

Thanks for the advice but these are only hypothetical queries so when reading them please imagine, hypothetically, that wallets don't exist and exchanges are the only place to hold crypto.

It should be remembered that with margin trading, your position may be liquidated and you will completely lose your money. In addition, margin trading implies the use of borrowed funds of the exchange, and you will need to pay an hourly commission for its use. So a spot purchase will be safer for you, although it will bring less profit than using margin.

[jossiel]

Investing in cryptocurrencies is of course very convenient to do through the spot market,

I don't think that you should let it stay on the spot market when you're just going for long term. Like the majority's concern about holding in an exchange, you have no full control to your crypto there.

I'm sure 99% of people in this world will also make purchases in the spot market and store them in a wallet,
whether it's a hardware wallet or a software wallet. For sure Spot market is the first and easiest choice to buy Bitcoin and altcoins.

Yes, we do purchase in exchanges and should be a norm to keep them in hardware wallets or those wallets good for long term not with exchanges.

[coinerer]

I am not find any connection with Spot, Margin or Derivatives for long term investment. Spot, Margin or Derivatives just a different trading system. if you want to keep holding your investment coins then you must keep your coins on your personal wallet or any exchange long time as much as you want. here spot can help you if you want to hold your coins in any exchange account

[YOSHIE]

Anyway, regarding long term investing and whether I should use Spot, Margin or Derivatives... My plan is to invest in loads of different coins/tokens but if we just use BTC as an example...

Before you continue trading or investing, of course you must understand the meaning/difenising of the three trades, as you said, namely: (spot, margin and derivatives).

Before that you need to know in detail what is called spot trading, Margin and Derivatives, for that you can understand the meaning of the three trades, below.

The spot market or spot market is a market for buying or selling financial instruments, commodities, or other assets using direct payment or cash techniques. Therefore, the spot market is often referred to as the cash market.

Margin trading is a method of trading assets using funds provided by a third party. When compared to a regular trading account, Margin accounts allow traders to access larger amounts of capital so they can apply to their positions.

What are Derivatives? Derivatives are contract agreements entered into by two or more parties with the aim of selling or buying assets or commodities. Later, the contract will serve as the object of trade. The price of this contract value must be agreed by both parties.

After you understand the three trades, you can conclude what trading methods are worth using or long-term investments, I can suggest for you the right long-term investment method you do is the spot method.

Margin and Derivative methods are not appropriate / suitable if you use it as an investment method, the two methods that are the most appropriate for you to do are trading, because they have a third party.

[livingfree]

I am not find any connection with Spot, Margin or Derivatives for long term investment. Spot, Margin or Derivatives just a different trading system. if you want to keep holding your investment coins then you must keep your coins on your personal wallet or any exchange long time as much as you want. here spot can help you if you want to hold your coins in any exchange account

Me too, I'm confused.

Just like what everyone else have figured out about long term investing and putting that into those things that OP has mentioned, it's like keeping it there for long and that's not an advisable thing to do.

Those three that has been said are the trading features where an exchange platform has to offer for every user that they have.

I don't find any significance for telling that if you're going long term, you should put it on spot, derivatives and mostly in margin.

It's misleading and if a newbie thinks of that and putting it long on margin, well, just a matter of time and he'll receive a text of being liquidated.