Spot trading vs Futures tradingđ€đ€
Which one is better?
Binance offers two main types of trading: spot trading and futures trading.
In spot trading, you simply buy a coin and wait. If the price goes up, you make profit. If it goes down, you hold. Your profit only comes when the market pumps.
Futures trading on the other hand works differently. Here, you can benefit from both sides of the market.
If the price pumps, you can go long and profit.
If the price dumps, you can go short and still profit.
Thatâs the biggest advantage of futures you donât need the market to only go up and in my opinion it's the only way to make money in the bear marketđ
Futures trading also allows leverage. Leverage multiplies your position size, meaning your profits can be double or even triple compared to spot trading. But this comes with a warning: higher reward also means higher risk. The risk with leverage is that you can get Liquidated. In simple words you will not only lose the money you re trading with, you will also lose all the money in your futures walletđ±đ±
But don't worry, with correct risk management you will never get Liquidatedđđđđ
Just follow međđ
đFirst, keep your leverage low.
5x to 10x leverage is more than enough.
đSecond, use small margin.
Only use 5â10% of your total portfolio per trade. That means if you have a 1000 dollar in your futures wallet only put 50 to 100 dollars per trade. You will be surprised to see how far the liquidation price sitsđ€€đ€€
The same rule applies to spot trading as well. Never go all-in on one coin. Use only 5â10% of your portfolio per trade so your portfolio stays diversified.
If one coin dumps, youâre not stuck. You can hold it, trade other coins, or even do DCA. Keeping some capital aside allows you to buy the same coin at lower prices, improving your average entry.
So there you go, now you are an expert as well, make informed decision and keep winning đ
$BTC
Which one is better?
Binance offers two main types of trading: spot trading and futures trading.
In spot trading, you simply buy a coin and wait. If the price goes up, you make profit. If it goes down, you hold. Your profit only comes when the market pumps.
Futures trading on the other hand works differently. Here, you can benefit from both sides of the market.
If the price pumps, you can go long and profit.
If the price dumps, you can go short and still profit.
Thatâs the biggest advantage of futures you donât need the market to only go up and in my opinion it's the only way to make money in the bear marketđ
Futures trading also allows leverage. Leverage multiplies your position size, meaning your profits can be double or even triple compared to spot trading. But this comes with a warning: higher reward also means higher risk. The risk with leverage is that you can get Liquidated. In simple words you will not only lose the money you re trading with, you will also lose all the money in your futures walletđ±đ±
But don't worry, with correct risk management you will never get Liquidatedđđđđ
Just follow međđ
đFirst, keep your leverage low.
5x to 10x leverage is more than enough.
đSecond, use small margin.
Only use 5â10% of your total portfolio per trade. That means if you have a 1000 dollar in your futures wallet only put 50 to 100 dollars per trade. You will be surprised to see how far the liquidation price sitsđ€€đ€€
The same rule applies to spot trading as well. Never go all-in on one coin. Use only 5â10% of your portfolio per trade so your portfolio stays diversified.
If one coin dumps, youâre not stuck. You can hold it, trade other coins, or even do DCA. Keeping some capital aside allows you to buy the same coin at lower prices, improving your average entry.
So there you go, now you are an expert as well, make informed decision and keep winning đ
$BTC
