Spot and futures are two types of trading instruments that are commonly used in the cryptocurrency market.
Spot trading refers to buying or selling cryptocurrency at the current market price, which is the price at which the asset is currently trading. In spot trading, the buyer and seller exchange the asset and the payment immediately, usually through a cryptocurrency exchange.
On the other hand, futures trading is a type of derivatives trading where the buyer and seller agree to buy or sell the cryptocurrency at a predetermined price and date in the future. Futures contracts are traded on cryptocurrency futures exchanges, and they allow traders to speculate on the future price of the cryptocurrency.
The main difference between spot and futures trading is the timing of the trade settlement. In spot trading, the settlement occurs immediately, while in futures trading, the settlement occurs at a predetermined date in the future.
Futures trading also allows traders to use leverage, which means they can control a larger position with a smaller amount of capital. However, this also increases the risk involved in trading futures.
In summary, spot trading involves buying and selling cryptocurrency at the current market price, while futures trading involves buying or selling cryptocurrency at a predetermined price and date in the future.
