Bitget Futures: Differences between spot trading and futures trading
What are spot, margin, and futures trading?
In the world of cryptocurrency trading, Bitget offers various ways to trade: spot, margin, and futures trading. Here's a breakdown of what each type involves:
Spot trading: You buy or sell crypto directly, and the assets are settled to your account immediately after the trade. It's straightforward and less risky, but your profits are limited to how much the market price moves.
Margin trading: Based on spot trading, this allows you to borrow funds (e.g., 3x or 5x leverage) to increase your position size. While it can amplify returns, it also raises your exposure to market volatility.
Futures trading: You speculate on the price direction of cryptocurrencies by buying and selling futures (like perpetual or quarterly futures). You can use leverage (up to 125x), giving you more strategic flexibility—but also greater risk.
Comparison of spot, margin, and futures trading
The table below outlines the key differences between the three:
|
Feature |
Spot trading |
Margin trading |
Futures trading |
|
Trading asset |
Actual cryptocurrency |
Actual cryptocurrency (with leverage) |
Cryptocurrency futures |
|
Asset ownership |
Yes |
Yes |
No |
|
Leverage |
None |
Low (e.g., 3–5x) |
High (up to 125x) |
|
Trading method |
Full amount |
Borrowed funds |
Margin-based trading |
|
Risk and return |
Low risk, limited return |
Moderate risk and return |
High risk, high return |
|
Strategy flexibility |
Simple (buy and hold) |
Moderate (short-term gains) |
High (long/short/hedging) |
In short, spot trading is ideal for conservative investors, margin trading is suitable for users looking to amplify returns without taking on extreme risk, while futures trading is best suited for experienced traders looking to capitalize on market volatility.
Use case comparison
• Current BTC price: 30,000 USDT
• User's capital: 3000 USDT
1. Spot trading
• Action: Buy 0.1 BTC with 3000 USDT.
• Outcome:
￮ If BTC rises to 33,000 USDT (+10%), you'll gain 300 USDT (0.1 BTC × 3000 USDT).
￮ If BTC drops to 27,000 USDT (−10%), you'll lose 300 USDT.
• Highlight: Your gains and losses move in direct proportion to the market—with no leverage and no risk of liquidation.
2. Margin trading (3x)
• Action: Buy 0.3 BTC using 3x leverage—invest 3000 USDT and borrow 6000 USDT, for a total of 9000 USDT
• Outcome:
￮ If BTC rises to 33,000 USDT (+10%), you'll gain 900 USDT (0.3 BTC × 3000 USDT, before deducting interest).
￮ If BTC drops to 21,000 USDT (−30%), liquidation will be triggered (as your margin is fully lost).
￮ Note: Liquidation price is for reference only. Actual liquidation is based on your real-time risk ratio.
• Highlight: Profits and losses are magnified 3x. Keep a close eye on the liquidation price.
3. Perpetual futures trading (10x)
• Action: Open a 10x long BTC futures position (worth 30,000 USDT), using only 3000 USDT as margin.
• Outcome:
￮ If BTC rises to 33,000 USDT (+10%), you'll gain 3000 USDT (similar to margin trading, but without borrowing).
￮ If BTC drops to 27,108 USDT (−9.6%), liquidation will be triggered (as your margin is fully lost).
￮ Note: Liquidation price is for reference only. Actual liquidation is based on your real-time risk ratio.
• Highlights:
￮ Supports both long and short positions, making it useful for hedging.
￮ Uses a funding rate mechanism (fees exchanged between long and short positions).
Conclusion
Spot, margin, and futures trading each have their advantages and disadvantages on Bitget. Choose the method that best suits your risk appetite, capital, and trading goals. Bitget provides powerful tools and risk controls to help you optimize your strategy and manage risk effectively.
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