Pros of Spot Trading:
Spot trading is simpler and less risky because you own the asset outright. You can hold it for as long as you want, and there's no risk of liquidation. It’s ideal for long-term investments and requires less experience to start.
Cons of Spot Trading:
Profit potential is limited to the price increase of the asset. You can’t amplify returns without additional capital, and you’re exposed to market volatility with no way to profit from downward movements.
Pros of Leverage Trading:
Leverage allows you to trade with borrowed funds, amplifying potential profits if the market moves in your favor. This means you can make higher returns with a smaller initial investment.
Cons of Leverage Trading:
Leverage increases risk significantly, as losses can exceed your initial investment. You’re also at risk of liquidation if the market moves against you, and it requires more skill to manage effectively.