Long term investing - Spot, Margin or Derivatives?

[harizen]

I didn't think you are an idiot. It's just that you test a strategy and since we don't know what will happen next, you end up losing on the process. That's a wonderful experience I should say and not a dumb thing that you did.

What kind of strategy should you do now, I think you already know it but there's a worry that it might lead to you again losing.

I won't say any advice but just continue testing some strategies until you found a working one that's fit on your long-term goals.

[1714168817]

1714168817

[loll_l]

Thanks for all of your replies - it's nice to see a forum and community who are actually trying to help and advise rather than condescend a newbie 

I realise that the most common and less risky way to invest long term is to purchase a coin/token through Spot on an exchange like Binance or KuCoin and then transfer the coin/token to a wallet like TrustWallet or MetaMask (as this is considered safer than keeping the coin/token on an exchange)...

If however, hypothetically speaking, we lived in a world where exchanges were perfectly safe and you didn't need to move your crypto to a wallet... and in this hypothetical world I wanted to purchase crypto with a 2x leverage, I was just wondering what the downside (apart from safety) of keeping a long term trade open in Derivatives would be....

From what I can gather through your replies, it seems as though another downside of going down this route (apart from safety) would be that keeping your trade open in Derivatives will accumulate fees that would not be accumulated in Spot.... How do these fees work?

Using my initial example which I have quoted below….
 

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?

In an example like the above, how much in fees can I expect to pay over a year?

[alik111]

Long term investment in margin or derivatives trading is much risky to be liquidated.So we should go for spot trading for long term investment.And we should enter the market in the bear session for the maximum profit for long term holding.

[Captain Corporate]

Trading or investing? If we are talking about investment then it should be a little bit more long term, which means it does happen via spot, but its basically buying something and holding it for a very long period of time until it makes you money. On the other hand if we are talking about something like trading, then these three would matter based on how good you are with them, doesn't matter which one you do, as long as you are good at it. I could make a lot of money via spot, but lose a lot on margin, you could be great at derivatives but lose on spot, its not how you do it, its how well you do it that matters.

[doomloop]

I didn't think you are an idiot. It's just that you test a strategy and since we don't know what will happen next, you end up losing on the process. That's a wonderful experience I should say and not a dumb thing that you did.

What kind of strategy should you do now, I think you already know it but there's a worry that it might lead to you again losing.

I won't say any advice but just continue testing some strategies until you found a working one that's fit on your long-term goals.

Test a strategy and lose $35k in the process? I think that's a lot but anyone can use a small capital first when they know that it was only a test run and they are not sure if the results is going to be positive or not. Anyway, he cleared it out that what he did at first is investing and maybe he is investing blindly and ended up picking the wrong coins. It's only great tho that he didn't give up after losing massive and it seems he is learning now because there he is, asking if the new starts that he is using are correct.

@OP I think you are doing fine with it, as you said you are seeing some positive results now. Just continue doing it and I hope you will soon recover all of your losses.

[Hamza2424]

Spot is the most productive side for the long long term investment as Low risk and also highly recommend for maximum profits. I know that Future trade is more attractive in term of the profits but as there is high risk for the investment according to the market sentiments in long term there is no place for the Future trade. Spot is a best option where surety of profits can be managed.

[passwordnow]

Spot is the most productive side for the long long term investment as Low risk and also highly recommend for maximum profits.

You're likely to lose more there than holding if you're for the long term. Long term doesn't mean that you have to actively trade and get the maximum profit. Someone who's aiming for that is losing more than the others who are chill with holding and does nothing.

I know that Future trade is more attractive in term of the profits but as there is high risk for the investment according to the market sentiments in long term there is no place for the Future trade. Spot is a best option where surety of profits can be managed.

Don't forget that in spot, losing is part of it and it's inevitable. There are traders that lose more than profiting whether they are on the spot or margin.

[AmoreJaz]

Spot is the most productive side for the long long term investment as Low risk and also highly recommend for maximum profits.

You're likely to lose more there than holding if you're for the long term. Long term doesn't mean that you have to actively trade and get the maximum profit. Someone who's aiming for that is losing more than the others who are chill with holding and does nothing.

I know that Future trade is more attractive in term of the profits but as there is high risk for the investment according to the market sentiments in long term there is no place for the Future trade. Spot is a best option where surety of profits can be managed.

Don't forget that in spot, losing is part of it and it's inevitable. There are traders that lose more than profiting whether they are on the spot or margin.

only few coins are worth holding long-term. this is why if you will venture on coins outside the top 10, you need to be very cautious with their market performance. if you feel they are about to go down, better sell it while you can. futures is only for those who know what they are doing. spot trading is good for starters, at least get the grasp of crypto trading. once you are getting good, you can explore other types of trading. but you need to start small so you won't lose much.

[kapalmabur]

Spot is the most productive side for the long long term investment as Low risk and also highly recommend for maximum profits. I know that Future trade is more attractive in term of the profits but as there is high risk for the investment according to the market sentiments in long term there is no place for the Future trade. Spot is a best option where surety of profits can be managed.

The spot market is indeed a trader's choice because it is safer and more comfortable than trading on futures,
but there are things that you may all forget that trading in the spot if you are wrong in buying and are greedy then of course you will still lose,
for example you buy Bitcoin priced at $60k and you hold until the current price because you have a reason Bitcoin will go to $100k,
yes that's an action that should be avoided in the spot market, because it will make you lose.

[dimonstration]

Spot is the best if you want to play safe and less worry for liquidation if the price get sour at the time you enter. Margin trading is the best if you want to get additional capital and to earn more with risk but manageable if you have enough capital to extend the liquidation margin to safe level but make sure to use only the leverage that your margin can handle and gives enough room for liquidation price margin.

Leverage trading is only good for short term trading since it has funding rate and liquidation price margin is very small than Margin trading so I don't recommend it for long term use unless you are onky using x3 below leverage.

[|MINER|]

If you ask me that question then my answer will be spot trading because here you can hold your fund like decentralised wallet.  And decentralised Wallet is the best for holding big fund for a long and cold wallet can be use for it . So if anyone wanna invest for long-term then choose spot trading for it and if the fund is big then use cold wallet for holding.

[GreatArkansas]

If you ask me that question then my answer will be spot trading because here you can hold your fund like decentralised wallet.  And decentralised Wallet is the best for holding big fund for a long and cold wallet can be use for it . So if anyone wanna invest for long-term then choose spot trading for it and if the fund is big then use cold wallet for holding.

The additional thing is you can stake the altcoins/Bitcoins you bought from spot trading to some platform like a centralized exchange or some DeFi platforms, because here, on spot trading, you will literally hold the real coin you bought, compared to derivatives like the futures market, which will only stay on the exchange.
Especially in a markett like these times, it's very risky to trade with high leverage if you are doing long, so spot for me is the safest.

[DanWalker]

If however, hypothetically speaking, we lived in a world where exchanges were perfectly safe and you didn't need to move your crypto to a wallet...

No, it's not what you think. Hold your money on centralized exchanges like you are depositing your savings in a bank, they can freeze your account any time or worse, the exchange crashes and you lose your assets. Money on a centralized exchange is not yours.
Unlike exchanges, non-custodial wallets like trustwallet or metamask, you are the only one who holds the keys and only you can access and use your property.

Looks like you need to learn more basics to get ahead in the market. I recommend equipping you with more knowledge before looking at investments or trades you are making, such as spot or derivatives...

[passwordnow]

Spot is the most productive side for the long long term investment as Low risk and also highly recommend for maximum profits.

You're likely to lose more there than holding if you're for the long term. Long term doesn't mean that you have to actively trade and get the maximum profit. Someone who's aiming for that is losing more than the others who are chill with holding and does nothing.

only few coins are worth holding long-term. this is why if you will venture on coins outside the top 10, you need to be very cautious with their market performance. if you feel they are about to go down, better sell it while you can. futures is only for those who know what they are doing. spot trading is good for starters, at least get the grasp of crypto trading. once you are getting good, you can explore other types of trading. but you need to start small so you won't lose much.

It's a long list if you'll look at the rankings but just to be safe, rank 1 and 2 are the best option and we all know that they are - BTC and eth. And about having that feeling of going down, it's your take to sell them anyway but if you're holding bitcoin and you're not even close to break even, are you going to sell as it goes down? I don't think that you'll take the losses and you'll sell bitcoin and you'll remain with nothing but a reduced capital that you did because of being not patient.

[Beparanf]

Spot is the most productive side for the long long term investment as Low risk and also highly recommend for maximum profits. I know that Future trade is more attractive in term of the profits but as there is high risk for the investment according to the market sentiments in long term there is no place for the Future trade. Spot is a best option where surety of profits can be managed.

This is true in crypto trading because of the liquidity and the risk involved. Using a trading tool that has interest and liquidation risk on volatile market is really not efficient in long term because the price volatility is already enough for profit multiplier in crypto rather than risk everything on one single price swing if the market moves in opposite direction of your position.

Spot is really the best for long term not efficiently but safely.

[libert19]

I do spot, either coin disappear or gives massive gains in few years timeline. Margin/derivatives trades are time bound afaik. I do not trade those, dipped my toes a couple times, lost some and gives anxiety.

[deathcode]

Spot is the most productive side for the long long term investment as Low risk and also highly recommend for maximum profits. I know that Future trade is more attractive in term of the profits but as there is high risk for the investment according to the market sentiments in long term there is no place for the Future trade. Spot is a best option where surety of profits can be managed.

This is true in crypto trading because of the liquidity and the risk involved. Using a trading tool that has interest and liquidation risk on volatile market is really not efficient in long term because the price volatility is already enough for profit multiplier in crypto rather than risk everything on one single price swing if the market moves in opposite direction of your position.

Spot is really the best for long term not efficiently but safely.

therefore many traders are more comfortable using spot trading for them. I'm not saying the other trades are not good, they can get more profit. but of course, the risks faced would be greater.
for those who want to develop skills in trading, it is not a problem. but for me, who have very little experience and skills in trading, will prefer to trade a spot.

[blue_hurricanger]

If you want to maximize your gains over a long time of holding, sure Margin or Derivatives is there for you. But as always, they're very risky and if you approach the market at the wrong angle, your loss will be much higher than just a simple Spot investment. To be honest, I think it's really up to you, to see if the gains are worth the risk or not. In my opinion, a long-term period of time in crypto is very hard to predict, too variable. Margin or Derivatives should be on the short-term investment, as long as you see a nice enough gain and profit, get out. Spot is more for the long term cause you ain't at risk if you keep holding it, as long as you've invested in a good altcoin or ETH and BTC.

[rozak]

If you want to maximize your gains over a long time of holding, sure Margin or Derivatives is there for you. But as always, they're very risky and if you approach the market at the wrong angle, your loss will be much higher than just a simple Spot investment. To be honest, I think it's really up to you, to see if the gains are worth the risk or not. In my opinion, a long-term period of time in crypto is very hard to predict, too variable. Margin or Derivatives should be on the short-term investment, as long as you see a nice enough gain and profit, get out. Spot is more for the long term cause you ain't at risk if you keep holding it, as long as you've invested in a good altcoin or ETH and BTC.

That's what makes Margin or Derivatives risk bigger than spot trading. only in spot trading, of course, have to choose the right asset. if the wrong choice of assets, of course, the long term or short term will be useless.
people with simple market analysis skills, of course, prefer spot trading. this will make the trader less risky, not without risk. because all trades I think have their level of risk.

[d3nz]

Spot is the most productive side for the long long term investment as Low risk and also highly recommend for maximum profits. I know that Future trade is more attractive in term of the profits but as there is high risk for the investment according to the market sentiments in long term there is no place for the Future trade. Spot is a best option where surety of profits can be managed.

I highly agree I have lost a lot of money on future trading, and I would say that spot trading is recommended since you can only get an impermanent loss while you can gain profit over time if the market goes up again.

And spot trading can only be the same as futures trading if you trade with bigger funds or volume.