Spot vs futures: what is the difference?
On the spot market you buy the coin itself. With futures you trade its price with leverage. The two carry very different risks.
Escoin Exchange offers both spot trading and futures. They look similar on screen, but they work very differently.
Spot: you own the coin
On the spot market you buy or sell the coin itself. If you buy 0.01 BTC, that bitcoin is in your account: you can keep it, sell it later or withdraw it to your own wallet. Your maximum loss is the amount you paid. The price can fall, but your position cannot be closed against your will.
Futures: you trade the price, with leverage
Futures are contracts that follow the price of a coin. You do not own the coin; you open a long position (profit if the price rises) or a short position (profit if it falls). You put up margin in USDT and can use leverage. For example, 10x means a position ten times your margin.
Leverage multiplies both profits and losses. With 10x, a 10% move against you can wipe out your margin.
Key futures terms
- Liquidation: if your margin falls to the maintenance level, the position is closed automatically and the margin is lost.
- Funding: every 8 hours long and short traders pay each other a small fee that keeps the contract close to the market price.
- Isolated vs cross margin: isolated limits the risk to one position; cross uses your whole futures balance.
- Take-profit / stop-loss: orders that close the position automatically at a price you choose.
Which one should you use?
Spot is simpler and suits long-term holding. Futures are tools for experienced traders who manage risk carefully. That is why every user takes a short knowledge quiz before the first futures trade on Escoin Exchange.
A few habits help on both markets: never risk money you cannot afford to lose, always use a stop-loss on futures, start with low leverage and check the fees before you trade.