What are the Differences Among Spot Trading, Margin Trading and Futures Trading

Features

Spot Trading

Margin Trading

Futures Trading

Underlying assets

The cryptocurrencies in holdings

Borrowed funds

Derivatives

Leverage

Not Available

1-10X

1-10X

Trading direction

Profit from price increases

📈 Go long 

📉 Go short

📈 Go long 

📉 Go short

Costs

Up to 0.2% trading fee

Up to 0.2% trading fee 

Borrowing daily interest rate

0.03%-0.05% trading fee 

Funding rate

CoinEx trading fee rate varies by different VIP Levels and Market Making Levels. View more about fees >>

Target traders

Long-term investors

Risk-averse investors

Intermediate traders with moderate risk tolerance

Investors with high risk tolerance

Short-term speculators

Characteristics

Directly exchange cryptocurrencies and gain actual ownership of the asset

Borrow funds from the platform to buy or sell more assets and magnify the initial capital.

Making profits from the rising/falling prices of cryptos by buying long or selling short based on your judgment.

Advantages

The number of coins you hold remains unchanged regardless of price fluctuations

Use leverage to maximize profits by buying long or selling short.

Short sell/long buy with higher leverage to maximize your actual gains.

Futures contracts have no expiration or settlement date.

Disadvantages

Short selling is not available. Traders can only make profits when the crypto price goes up.

Traders need to pay interest on borrowed coins/tokens and bear a high risk of liquidation and double loss

Traders will bear a high risk of double loss and forced liquidation.

 

Meanwhile, Futures Trading can be divided into the following types: Linear and Inverse contracts. The differences between Linear and Inverse contracts are as follows:

Contract Type

Differences

Linear Contracts

(USDT-Margined Perpetual)

E.g. BTCUSDT

1. Favorable for short sellers.

2. Traders only need to hold USDT to open positions.

3. When the price goes down, you will not suffer extra loss caused by opening positions with non-stablecoin like inverse contracts.

4. Lower risks with mild price volatility.

5. Use stablecoins as the pricing and settlement currencies, such as USDT and USDC.

Inverse Contracts

(Coin-Margined Perpetual)

E.g. BTCUSD

1. Favorable for long-term holders.

2. Traders need to hold settlement coins like BTC or ETH.

3. When the price goes up, you can make extra profits from holding BTC or ETH long positions.

4. Higher risks with greater price volatility.

5. Use USD as the pricing currency and BTC or ETH as the settlement currency.

 

 

Related Articles

What Are Linear Contract and Inverse Contract

Linear Contract Trading Tutorials (WebApp

Inverse Contract Trading Tutorials (WebApp)

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