#BSCTrendingCoins Spot Trading vs. Futures Trading on Binance

Both spot trading and futures trading are popular methods of trading on Binance, but they have key differences in terms of risk, leverage, and strategy.

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1. Spot Trading

Spot trading involves buying and selling cryptocurrencies instantly at the current market price.

Key Features:

Immediate Settlement: When you buy or sell a crypto asset, the transaction is completed instantly.

Ownership: You own the actual cryptocurrency after buying it.

No Leverage: Only the funds in your account can be used; no borrowed money is involved.

Lower Risk: Losses are limited to the amount you invest.

Example:

If you buy 1 BTC at $70,000, you own that BTC in your spot wallet. If BTC’s price increases, you can sell it for a profit. If it drops, you hold the loss unless you sell.

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2. Futures Trading

Futures trading involves buying or selling a contract that represents a cryptocurrency at a future price, without actually owning the asset.

Key Features:

Leverage: You can trade with more money than you actually have (e.g., 10x leverage means you control $10,000 with only $1,000).

Short & Long Positions:

Long: If you expect the price to go up, you buy a contract.

Short: If you expect the price to go down, you sell a contract.

Higher Risk & Reward: With leverage, profits can be multiplied, but losses can also be severe.

Expiration (Optional): Binance offers both perpetual contracts (no expiry) and delivery contracts (expire