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What are the differences between Futures and Spot on Binance?
The two most common methods in crypto investing are spot and futures trading.
In spot trading, you buy and sell crypto instantly, while in futures trading, you commit to buying or selling at a specific price and date.
So, what are the differences between these two methods?
The two most common methods in crypto investing are spot and futures trading.
In spot trading, you buy and sell crypto instantly, while in futures trading, you commit to buying or selling at a specific price and date.
So, what are the differences between these two methods?
1.Ownership
Spot: The actual cryptocurrency asset is purchased.
Futures: A contract is purchased; there is no physical ownership.
2.Leverage:
Spot: No leverage is available.
Futures: Leverage of up to 125x can be used.
3.Risk Level:
Spot: Lower.
Futures: Higher (there is a risk of liquidation).
4.Profit/Loss Direction:
Spot: Profit is made only from price increases.
Futures: Profit can be made from both price increases (long) and price decreases (short).
5.Funding Fee:
Spot: None.
Futures: Exists; paid or received at specific times.
6.Asset Transfer:
Spot: Held in the spot wallet.
Futures: Transferred to the futures wallet.
7.Order Types:
Spot: Limited.
Futures: More advanced order options are available.
8.Liquidation Risk:
Spot: None.
Futures: The entire balance can be wiped out in adverse price movements.
9.Psychological Pressure:
Spot: Lower.
Futures: Higher.
10.Commission Fee:
Spot: Low.
Futures: Higher; can increase due to leverage.
11.Application Interface:
Spot: Simpler.
Futures: More complex and technically detailed.
12.Technical Knowledge Requirement:
Spot: Low.
Futures: High.
13.Wallet Transfers:
Spot: Usually done within a single wallet.
Futures: Transfer from spot wallet to futures wallet is required.
14.Profit/Loss Ratio:
Spot: Generally provides low returns.
Futures: High returns can be achieved with a small amount of capital.
