Many newcomers are completely confused:
Does "spot trading" simply mean buying cryptocurrency?
Is the contract a larger version of the spot market?
"Options sound so sophisticated, is it something institutional investors do?"
In addition, there are a bunch of pages on various platforms:
Spot / USDT-margined contracts / Coin-margined contracts / Options / Perpetual / Delivery contracts...
The more you read, the more confused you get, so in the end, you just say this:
"Since they're all going up or down anyway, I'll just pick one randomly."
The result is often —
Choosing the wrong tools means breaking your leg on a high-risk track before you've even learned to walk.
In this article, I won't go through a bunch of technical terms; I'll just talk about a core difference that you'll use throughout your life:
Spot, contracts, and options.
There is actually only one essential difference:
👉 What you are actually buying is—"the underlying asset / the direction of leverage / the right over a period of time".
Once you fully grasp this statement, your sense of awe towards these three tools will be completely different.
1. Spot goods: You are buying "the item itself".
Let's start with the simplest one.
What are you doing?
Spot trading means: you pay money to buy something.
In the crypto world, it's about buying coins.
In the stock market, it means buying stocks.
What you've bought is **"the thing itself"**:
Prices have gone up, so this item you have is worth more.
When prices fall, the value of the item you hold depreciates.
Even if it drops drastically, as long as it doesn't go to zero, you still have this thing.
Several key characteristics of spot trading:
It will not be forcibly closed by the system.
Prices can plummet
But as long as it doesn't go to zero, you can hold on for as long as you want.
There is no such thing as a "margin call price".
How much can you lose?
—The worst-case scenario is that the price drops all the way down from the purchase price to 0.
It sounds terrible, but at least you control the pace.
Time won't force you to make a decision.
Spot goods have no expiration date
No funding fee
There's no pressure like "If it's not fair today, we'll charge you this much cost."
Risk structure: simple, straightforward, and with a clearly visible bottom line.
Worst case: Drop to 0
Best approach: Follow the market trend, choose a good entry point, and hold for a period.
In short:
Spot trading involves buying the "object itself".
What you're losing out on is "getting something that's becoming increasingly worthless."
It's a bit slower-paced, but much more "harmless" to humans and animals.
II. Contracts: Buying "leveraged directional bets"
Let's look at the contract again.
What are you doing?
A contract is essentially:
You provide a deposit.
They signed an agreement with the market to "bet on the direction of prices".Its main point is:
It's not about holding the coin/asset itself.
Instead, it uses leverage to amplify the direction of long and short positions within the prescribed rules.
You earn the price difference by correctly predicting the price direction and amplifying it with leverage;
What you lose is the margin plus the cost of accelerated liquidation due to a wrong market direction.
Several key features of contracts:
With leverage: both profits and losses are amplified.
10 times, 20 times, 50 times, 100 times
If you go in the right direction, the returns can be very exciting.
If you go in the wrong direction and the market fluctuates even slightly, your margin will be wiped out by the market.
There is a "margin call price," and if you make a mistake to a certain extent, you will be kicked out of the game by the system.
Unlike spot trading, which can withstand the test of time...
The system will automatically close your position as soon as the price approaches your risk limit.
You don't even have time to "wait for it to come back."
Many people in the contract are not "wrong about the trend".
Rather, it's that "time and volatility didn't give you a chance to wait for a pullback."
What you're buying isn't just a target, but a "magnified direction" and a "faster pace of life and death."
Spot market: Prices fluctuate more slowly, but you're still invested.
Contracts: If prices fluctuate rapidly, you might get thrown off balance midway.
In short:
The contract is a leveraged long/short position.
You are more focused onFluctuation speed + one's own emotionsGame theory.
When you don't know how to play, you're most likely to ruin yourself.
III. Options: You buy "the right to make a choice within a certain period of time".
Many people get a headache just hearing about options, but it can be understood simply:
What are you doing?
Options ≈You pay a royalty fee.
Purchase the right to "buy/sell at a certain price before a certain time".
So what you bought is not:
Not the underlying asset itself (that's a physical commodity).
It's not simply about leverage (that's a contract).
Instead:
You can choose whether or not to exercise this right within a certain period of time.
Key characteristics of options:
Buyer: The amount of loss was fixed from the beginning.
You pay a "royalty fee"
Worst-case scenario: This royalty will be completely wiped out.
Unlike high-leverage contracts, it won't suddenly become an uncontrollable burden.
But most people's options purchases ultimately end up: going to zero.
Options are mostly a game of "time value + volatility expectation".
If the price does not go as you requested within the specified time...
Your right will gradually lose its value.The last one is worthless
The real complexity of options lies in the three elements: time, volatility, and direction.
Not just rises and falls
Also: How much did it rise? How fast did it rise? Over how long did it take?
For beginners, the amount of information is overwhelming.
In short:
Options are purchased with the promise of "a certain period of time".
"The right to act at a certain price"
Losses are manageable, but the structure is complex.
Most people pay all the royalties before they even understand the process.
IV. One key difference that helps you quickly determine what you're playing.
You can use a very simple reference table to firmly remember the three:
When I took the money to enter the venue...
What exactly are they buying?
1) Spot goods: You are buying "the item itself".
You actually hold the target in your hand.
Loss = Price drop + You holding on
There is no margin call price, only a question of whether or not one is willing to admit defeat.
Who is it suitable for?
👉 For beginners, those who don't have time to monitor the market, and those with a moderate risk tolerance.
2) Contracts: You're buying into "amplified bullish/bearish direction + faster life-or-death pace".
You are controlling the amplified position.
Loss = Margin wiped out + System forces liquidation
You might be looking in the right direction, but you could still be eliminated from the game halfway through.
Who is it suitable for?
👉 Someone who already has a complete trading system and understands position sizing and risk control.
It's not a "toy for beginners to practice with."
3) Options: You buy "the right to make a choice within a certain period of time".
You paid a premium in advance for "potential market movements".
Loss = Premium gone to zero
To understand the relationship between direction, fluctuation, and time.
Who is it suitable for?
👉 Has some experience and is willing to spend a lot of time understanding the structure.
People who treat options as a "risk management tool" rather than a gambling tool.
V. The most toxic misconception:
"I've mastered spot trading; contracts and options are just a bit more exciting."
Many people go astray starting with this sentence:
"Spot trading is boring, too slow. I want to try something more exciting."
Then the logic becomes:
Spot trading → Understanding basic buying and selling
Contract → Treat it as an "accelerated version of spot trading"
Options → Treat them like "doubled lottery tickets"
turn out:
I haven't figured out how to play the spot market yet.
Position sizing, stop-loss orders, and risk control are still a complete mess.
I'll start by surfing the high-leverage contracts and options.
This is like:
I just learned to ride a bicycle.
You just want to drive a race car on the track.
They're not wearing seatbelts.
The order should be reversed:
First, learn to read charts, manage your position size, and set stop-loss orders (you can practice in a spot/low-leverage trading environment).
Further understanding of margin, leverage, and liquidation price in contracts
Finally, it comes down to "whether or not to use options for risk hedging/specific strategies".
It's not that you can't use these tools in your entire life.
Instead, you need to know:
They "increase the difficulty," not "increase the success rate."
VI. So, what should a trading novice do now?
If you are still in the "basic literacy stage"
I have very practical advice for you:
First, treat spot trading as the main battleground.
Learn to read trends, support and resistance levels, and structural patterns.
Learn to trade in batches, learn to set stop-loss orders, and learn to stay out of the market.
Contracts are used only as a tool for "amplification strategies," not as the primary battleground.
In the beginning, you can use very low leverage (even within 1-3 times) and small positions.
Use it to practice "planned profit/loss ratio" and "execution".
Instead of gambling away all your capital on a so-called "get-rich-quick" opportunity.
First, understand the concepts of options trading; don't rush into live trading.
First, understand: buyer/seller, premium, and time value.
At the very least, you should: not spend real money on things you don't understand.
so
You can write this sentence down today:
Spot = the underlying asset itself
Contract = Amplified bullish/bearish direction
Options = the right to hold a position for a certain period of time
What you really need to choose is not:
Which one earns the most?
Instead:
Given your current understanding, time, and mindset,
Which one wouldn't let you learn to swim before you even know it?
They were thrown directly into the deep water.
(Trading for Beginners 101) This series
It's to help you before you actually enter the venue.
First, understand the risk structure of these "play methods".
If you are currently switching between spot, futures, and options:
In a while, spot goods
High-multiplier contracts in a short time
I occasionally see screenshots of options and get tempted.
But I just don't understand it at all:
Which one should we focus on studying, and what's the safest way to get started?
Then come find me.
I can determine your options based on your available funds, time, and risk tolerance.
Let me help you clearly define the boundaries of using these three tools.
As for which one you can master in the future, that depends on how much time and effort you are willing to put into practicing.
