CoiCoin

The difference between currency trading and contract trading

Consenlabs
2022-12-30 00:40:06
Spot Trading:
In the spot market, you buy and sell digital currencies with instant delivery, and you immediately own the corresponding cryptocurrency after the order is completed.
Contract transaction:
In the contract market, the position obtained after opening a position is a contract representing the value of a specific cryptocurrency. When a contract is opened, you do not own the underlying cryptocurrency. What you have is a contract that says you agree to buy or sell a specific cryptocurrency at some point in the future.
For example: if you buy BTC with USDT in the spot, then BTC will be displayed in the asset list in the currency account, which means that you now hold the corresponding BTC;
In the contract, if USDT is used to open a long BTC position, the corresponding BTC asset will not be displayed in the contract account. The contract account only has USDT assets, and the position displayed in the position means that you have the right to sell the BTC in the future. gain or loss. Your profit or loss is the amount of USDT.
· Leverage
Leverage makes contract trading extremely capital efficient. When doing contract trading, you only need to invest a fraction of the market value of 1 BTC to open a contract position of 1 BTC. In contrast, spot trading does not offer leverage. For example, the current market price of 1BTC=30000USDT, if you want to buy 1 BTC in the spot market, you need to spend 30000USDT to get 1BTC, while in the contract market, if you open 100 times leverage, you need to pledge 300USDT to get 1BTC long positions ownership.
· Flexible choice of long or short positions
If you hold USDT in the spot, you can only buy the currency. When the market continues to fall, buying the currency will not be profitable;
However, in the contract, if you hold USDT, you can choose to go long or short according to the market conditions. When the market continues to fall, you can choose to go short to make a profit, and when the market continues to rise, you can choose to go long to make a profit.