When trading on Binance, it’s important to understand the difference between spot trading and futures trading. Both offer unique advantages, but they work in different ways.
Spot Trading
In spot trading, you buy or sell cryptocurrencies at the current market price, and you own the asset immediately. If you buy Bitcoin, for example, it is yours to hold or sell whenever you want. This type of trading is simple, and you only use the money you already have.
Futures Trading
Futures trading is more complex. Instead of buying the actual asset, you agree to buy or sell it at a set price on a future date. You don’t own the asset right away. Instead, you’re speculating on whether its price will go up or down. Futures trading also allows you to use leverage, which means you can trade with more money than you have, but it comes with higher risk.
Key Differences:
Ownership: In spot trading, you own the asset immediately. In futures trading, you are speculating on price without owning the asset.
Leverage: Spot trading uses only your funds, while futures trading allows you to borrow money to increase your potential profits (or losses).
Risk: Spot trading is generally safer for beginners, while futures trading involves more risk and is suitable for experienced traders.
For beginners, spot trading is usually a better starting point. Futures trading is for those comfortable with higher risks and advanced strategies.
