Futures trading and spots trading explained briefly

[palle11]

I do believe that some of us new traders here may be in misunderstanding of these type of trading when we here them, at least at a point I was thinking far in my own quiet time on what it is just like any other trader on terms confused on.

To understand these trading types is to look at the simple meaning of future (which means a time to come). So if we understand that simple meaning then we can explain it together in terms of trade to mean a trade to be carried out or executed in a time to come (future). So in such kind of trade, buyers and sellers agree on a trade to be carried out in a future usually a long time and commodities traded include public bonds, metals, fiat or crypto, agricultural products, animals and other other things to trade etc.

This is where spots trading comes in. Spots trading is a shorter version of futures trading. It involves short time immediate buying or selling of which it features of trading are scalping, day trading and swing.

A futures trade does not have over the night charge but that exist in spots trading as swap.

There are more features though but what do you have as opinion ?

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[YOSHIE]

I do believe that some of us new traders here may be in misunderstanding of these type of trading when we here them, at least at a point I was thinking far in my own quiet time on what it is just like any other trader on terms confused on.

As far as I know and what I have done in crypto trading in several parts, generally Spot, Futures and Margin, overall the three trading methods have different options in action.

Example:
Futures, when you open and start trading you can choose the option Limit, Market, Limit trigger, Take Profit, Stop loss and so on up to the Trailing Stop option.

Talking about Spot trading, for me and my understanding that I have done, Spot trading options are more towards investment methods, that is what is mentioned in futures trading, but that rarely happens, except: you choose a type of crypto such as Bitcoin or Ethereum, the two types of crypto are movement and changes can be made within a period of time, three days, one week and arrive at a certain selling price, Spot trading is often done for those with large capital, for example buying 2-5 Bitcoin or 5-10 Ethereum reselling within 1 week or 1 month, see the development of Bitcoin or Ethereum, profit or loss.

However, Spot trading is often an option for users with minimal capital, they are more considered as an investment method, with minimal capital.

[Gladitorcomeback]

I think future trading is just like betting. You make predictions whether the price of token increase or decrease. If your prediction become true your capital token will increase. If it goes wrong you token quantity will go down until it hits stop limit or liquidate you.

Spot trading is just like buying something with thinking that it's price will increase without any prediction involved. Token price can be down or up but quantity of token will remain same. There is no liquidation and you can also store this token in your cold wallet while future trading can be perform in Cex.

[tvplus006]

...There are more features though but what do you have as opinion ?

The main difference between futures trading and spot trading is that you buy a contract, not a cryptocurrency, while with spot trading you buy cryptocurrency and, accordingly, you can freely dispose of it. In addition, in futures trading you use borrowed funds, while in spot trading you use only your own capital.

[SamReomo]

I think future trading is just like betting. You make predictions whether the price of token increase or decrease. If your prediction become true your capital token will increase. If it goes wrong you token quantity will go down until it hits stop limit or liquidate you.

I agree that futures trading does involves predicting the future price of an asset and there are risks involved in that and the biggest risk is the liquidation. But, still it's not correct compare it to betting which is totally a different thing. Futures trading involves buying and selling of real assets in this case crypto-currencies and they have some kind of regulation involved while on pure gaming you are just betting to win and there aren't any assets involved in that.

While it's true that futures trading does involves some risks but the gambling is purely a risk in which either you win or lose. With futures trading you have option of cross trading and isolated trading and leveraged can also be set. In a case of sudden price increase if you have put a trade on shorting you can control that with hedging techniques but in gambling there isn't anything that you can do if you face a loosing bet. 

[Tytanowy Janusz]

To understand these trading types is to look at the simple meaning of future (which means a time to come). So if we understand that simple meaning then we can explain it together in terms of trade to mean a trade to be carried out or executed in a time to come (future). So in such kind of trade, buyers and sellers agree on a trade to be carried out in a future usually a long time and commodities traded include public bonds, metals, fiat or crypto, agricultural products, animals and other other things to trade etc.

This is where spots trading comes in. Spots trading is a shorter version of futures trading. It involves short time immediate buying or selling of which it features of trading are scalping, day trading and swing.

A futures trade does not have over the night charge but that exist in spots trading as swap.

Wrong! Just use Google to research it, or simply use it even with a test account instead of guessing based on the nomenclature.
You can daytrade, scalp, or swing trade on both spot and futures. There is no such thing as "buyers and sellers agree on a trade to be carried out in a future". You can do whatever you want. buy now and sell in a second or after a year. The only difference is that in spot trading you are buying and selling real assets, and in futures trading you are not even tauching a real coin/bond/metal. In spot trading, you need to have the asset to sell it (or borrow it from someone who has it), in futures you only need to find a person willing to buy, and you can sell as much as you want. You are just finding a person who is willing to accept the opposite side of the transaction, and no one has to own a coin. You just agree with each other that from now on I earn on the rising price and you on the falling price.

[taufik123]

-snip-
In spot trading, you need to have the asset to sell it (or borrow it from someone who has it), in futures you only need to find a person willing to buy, and you can sell as much as you want. You are just finding a person who is willing to accept the opposite side of the transaction, and no one has to own a coin. You just agree with each other that from now on I earn on the rising price and you on the falling price.

What you explained is completely correct. spot trading is a trade that will make assets as the trader's ownership when purchased and there are assets held. whether it is sold immediately or not will not matter, it's just that the value will decrease due to fluctuations in crypto prices.

More minimal risk because there are still assets owned. while futures trading in my opinion is a higher risk because every time you place a Long or Short order and make a wrong prediction everything will be liquidated, especially if you use large leverage.

Futures trading looks easy, just guess the price is up or down but the risk is very high.
This can be like gambling if you only rely on instinct without having trading knowledge.

[palle11]

...There are more features though but what do you have as opinion ?

In addition, in futures trading you use borrowed funds, while in spot trading you use only your own capital.

You can also borrow in spot trading which is more like use of leverage.

To understand these trading types is to look at the simple meaning of future (which means a time to come). So if we understand that simple meaning then we can explain it together in terms of trade to mean a trade to be carried out or executed in a time to come (future). So in such kind of trade, buyers and sellers agree on a trade to be carried out in a future usually a long time and commodities traded include public bonds, metals, fiat or crypto, agricultural products, animals and other other things to trade etc.

This is where spots trading comes in. Spots trading is a shorter version of futures trading. It involves short time immediate buying or selling of which it features of trading are scalping, day trading and swing.

A futures trade does not have over the night charge but that exist in spots trading as swap.

You can daytrade, scalp, or swing trade on both spot and futures. There is no such thing as "buyers and sellers agree on a trade to be carried out in a future".

Yeah some of the things you said are correct and not totally taking out the things already said but is just to make it simpler. Like in this instance, is just for a lay man to understand that their is a kind of meeting point for drop off and collection which is in form of buying and selling but not physically.

[tvplus006]

...There are more features though but what do you have as opinion ?

In addition, in futures trading you use borrowed funds, while in spot trading you use only your own capital.

You can also borrow in spot trading which is more like use of leverage.

Following your logic, buying cryptocurrencies on the spot market with funds borrowed from a traditional bank can also be considered as margin trading? It does not matter the origin of the funds, whether you took them from the bank or your friend lent them to you, the trading mechanism is important here, in which there is no Margin Call option.

[ShowOff]

Futures trading looks easy, just guess the price is up or down but the risk is very high.
This can be like gambling if you only rely on instinct without having trading knowledge.

I really don't want to reminisce about my previous experience, but it is clear that the risk of futures trading is very bad when the market trend is different than what we predict.

Futures traders can lose their entire budget on this type of trading, but of course there are many other traders who can take profits as long as they have a good strategy and understanding. I tend to recommend spot trading over futures if someone asks which is best for beginners and non-experienced traders, but these topics may serve different purposes.

[livingfree]

Going with futures is mainly a gamble so if you just want to gamble, go ahead and do it. There are traders that are good with it because they can win on this gamble with the strategies that they've got.

But newbies get to misunderstand this because it's not what they think that will make them rich. It's true that there have been newbies thinking that this is going to make them rich.

Not that they know of, it's not really the actual thing that they should only know. There's more with trading and not everyone that goes in the futures win.

[Patrol69]

Everyone probably has a rough idea about spot trading so I am trying to discuss about futures trading.  

Future Trade is one of the riskiest sites in the trading system. Money is not guaranteed here. Futures trading can generally be done in two ways, one is short and the other is long. Long trade means you have accepted trade in Bitcoin and you have accepted long in future trade. the more the price of Bitcoin increases the more money will be deposited in your account and another is shot in this method the more the value of your coin decreases the more money will increase in your account but if any  Due to the increase in the value of your coins, the money will slowly decrease from your main account and if you cross a certain limit, your money will disappear completely and you will never get it back. That is, in the house of future trading which Liq. Price says. There are certain multiples (X) through which futures trades are commonly accepted such as 5x, 10x, 15x,  20x, etc. The more X you take, the greater your financial risk.

[Faisal2202]

There are more features though but what do you have as opinion ?

You really tried your best to distinguish between future trade and spot trade and i think a newbie will find it still difficult to understand. Because an example will make it more easy to understanding.

And in my opinion, future trading is not for newbies as its highly risky and involve so much un-prediction so if you are newbie and have less idea about market sentiments then i suggest you to do spot trading because even if market goes down you still have your money and have a possibility of making profit again or atleast booking your own capital instead of losing it all, like in future trading.

The best part i like about future trading is, i can start even with $5 and can leverage even 10x on it but the worst part it, you could lose it all. So i don't recommend it to anyone because i am not in favor of it.

While it's true that futures trading does involves some risks but the gambling is purely a risk in which either you win or lose.

Agreed, as many used to say it's gambling, like even when a person start "X" business without proper knowledge, it's also gambling. So proper knowledge and case study is necassary to avoid gambling situations. But i also agreed with gladiator's point because future is full of risks and a newbie will always lose his money in it. So better to remain save.

[borovichok]

I do believe that some of us new traders here may be in misunderstanding of these type of trading when we here them, at least at a point I was thinking far in my own quiet time on what it is just like any other trader on terms confused on.

To understand these trading types is to look at the simple meaning of future (which means a time to come). So if we understand that simple meaning then we can explain it together in terms of trade to mean a trade to be carried out or executed in a time to come (future). So in such kind of trade, buyers and sellers agree on a trade to be carried out in a future usually a long time and commodities traded include public bonds, metals, fiat or crypto, agricultural products, animals and other other things to trade etc.

This is where spots trading comes in. Spots trading is a shorter version of futures trading. It involves short time immediate buying or selling of which it features of trading are scalping, day trading and swing.

A futures trade does not have over the night charge but that exist in spots trading as swap.

There are more features though but what do you have as opinion ?

Different methods of trading exist. Of fact, there are two sorts of trading: spot and future trades. They are both similar but work in different ways. Spot trading is a basic transaction that takes more balance and strategy creation. It is a day trade that many traders look forward to since they believe it is straightforward. While future transactions are viewed as the oil well in trading, they are fairly complicated to comprehend because they incorporate more features than people can handle. Future trades are divided into two categories: isolated and cross-margined trades, as well as leverages and margins, and there are two types of orders: long and short. Futures trading will appear complicated if these basic concepts are not understood.

[Tytanowy Janusz]

Futures trading looks easy, just guess the price is up or down but the risk is very high.
This can be like gambling if you only rely on instinct without having trading knowledge.

Same apply to spot trading. If you go with your instinct and spot buy shitcoin that is going to do a rug-pull you will end up with nothing.
The only difference is that you can't get margin call, but there is a easy fix for this called money management and proper stoploss which is important also for spot trading.

You can't say a tool is bad just because it requires a little more knowledge. You might as well say that a stick is better than a knife at cutting meat, because you can cut yourself with a knife.

Yeah some of the things you said are correct and not totally taking out the things already said but is just to make it simpler. Like in this instance, is just for a lay man to understand that their is a kind of meeting point for drop off and collection which is in form of buying and selling but not physically.

To make it simple. In spot trading, you are buying or selling an asset, in futures trading, you are buying/selling exposure to the price change of an asset and nothing more.

[Blowon]

spot trading is easier to use and understand and I think spot trading has minimal risk and less manipulation of the candles from possible cheating. while futures trading has a faster movement time but a high risk with continuous movement during the transaction. I've seen lots of people leave a trade like this in a few minutes but waste their money. well it's terrible if they don't put stop loss.

[palle11]

I've seen lots of people leave a trade like this in a few minutes but waste their money. well it's terrible if they don't put stop loss.

If you see a trader that is not using stop loss, you should know it is a bigger risk already taken because the account is waiting to be blown off at a larger volatility wave depending on the account size. Whether spots trading or futures, using stop loss is advanced.  Most losses recorded is because of that reason, it takes a strong emotion to stop a losing market manually but if you have already set a stop loss, it will be easily understood as risk appetite taken for the trade.

[death69]

Futures trading, think of it like organizing a bash for next month. Agree on the details now, but party time's in the future. Spots trading? Picture buying a burger and chowing down immediately. Right here, right now. Futures trading: no annoying overnight charges. Attractive for those playing the long game. Spots trading: fast-paced, ideal for short-term trades. As for stuff, futures trading offers a smorgasbord: bonds, metals, even digital coins! Spots trading: focuses on quick transactions, like cash or cryptos. The choice? Up to you, your tactics, your appetite for risk. Both can bring home the bacon! Jump into trading with enthusiasm, and may your ventures be prosperous!

[taufik123]

-snip-
Futures traders can lose their entire budget on this type of trading, but of course there are many other traders who can take profits as long as they have a good strategy and understanding. I tend to recommend spot trading over futures if someone asks which is best for beginners and non-experienced traders, but these topics may serve different purposes.

About bad experiences, I also experienced it and have never touched futures trading again.
Not only strategy, but psychology is also very much played in futures trading. it will drain emotions when experiencing liquidity.
Really not recommended for those who are too panicked and do not understand futures trading completely.

Same apply to spot trading. If you go with your instinct and spot buy shitcoin that is going to do a rug-pull you will end up with nothing.
The only difference is that you can't get margin call, but there is a easy fix for this called money management and proper stoploss which is important also for spot trading.

You can't say a tool is bad just because it requires a little more knowledge. You might as well say that a stick is better than a knife at cutting meat, because you can cut yourself with a knife.

Yes, every tool will have good and bad both spot and futures trading, but it is riskier to trade futures because it is not recommended for beginners or for those who do not understand technical analysis or strategies for futures trading. But about the coin selection on spot trading, shitcoin is really not recommended, Bitcoin is still the best choice.

[tvplus006]

...Future Trade is one of the riskiest sites in the trading system. Money is not guaranteed here...

Guaranteed income, in principle, does not exist in the cryptocurrency market. If you see in the cryptocurrency market that a guaranteed income is offered somewhere, then obviously you have a ponzi scheme in front of you. As for futures trading, the risk of losing your money here is much higher than with spot trading.