Basic Types of Trading
Basic Types of Trading
There are basically two types of trading on binance generally (SPOT trading and FUTURES trading
Spot Trading: you buy any coin of your choice at any given rate, you HODL for it to rise higher, you sell at any point you feel it has risen enough
FUTURES trading: you predict whether a particular coin is going to rise of fall in price, if it goes in opposite direction from your prediction, you lose your money and your coin
Note: In SPOT trading, you can never lose your coin, the worth of your coin can only reduce but your coin remains to rise again in worth when the market goes green.
For newbies, spot trading will be a better type of trading as they do not have to worry about the price and as long as they can hold the coin and not sell at a low price, they will have a chance to sell at the next high price.
Future and margin trading will not suit newbies, especially if they do not have much knowledge in analyzing the market and they will panic to see the price is down for a little.
While in spot trading, you are not actually losing if you do not sell your coin, in the future and margin trading, you can lose all of your funds if you do not close your trade.
Be careful deciding which types of trading you want and I suggest using spot trading while learning more about trading.
There are 3 actually, the last one is margin trading. It might seem the same as futures however its slightly different than futures.
Basically on margin you got much less leverage, usually 10x instead of 125x. You also pay different fees and the bitcoin that you long, is actually bought on the real spot market. So you are not buying a derivative like you are on the futures platform.
With margin you pay a fixed rate depending if you long or short bitcoin. And on futures the rate is determined by the funding rate or the futures premium/discount. So they are more or less the same but with different rules.