Abstract: This article will detail the differences between Bitcoin contracts and spot trading, aiming to provide readers with simple and understandable background information to spark their interest.
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- Differences in trading time
Bitcoin spot trading is continuous 24 hours a day, while Bitcoin contract trading occurs within specific time periods. The advantage of Bitcoin spot trading is that it can be traded at any time, as it is based on real-time market prices. However, for some investors, trading time needs to have regulations and restrictions, making Bitcoin contract trading more suitable in such cases.
In addition, Bitcoin contract trading typically offers more trading strategies to choose from, such as leveraging trading and other methods for buying and selling, increasing the opportunities for investors to earn profits.
- Price differences
The price of Bitcoin spot trading is based on real-time market prices and is traded according to market supply and demand. In contrast, the price of Bitcoin contracts is set by the exchange, usually considering future market trends and other factors. Therefore, the price of Bitcoin contract trading may be more influenced by the exchange compared to Bitcoin spot trading prices.
Additionally, the value of Bitcoin contract trading is affected by leverage during the trading process, which may lead to greater price volatility and risk. Investors need to understand the higher risk and return balance when engaging in Bitcoin contract trading.
- Use of margin
Bitcoin spot trading is immediate and typically does not involve margin, while Bitcoin contract trading requires margin payment. In Bitcoin contract trading, investors prepay a portion of the trading costs or margin, which can increase trading volume and amounts. This method is called leveraged trading.
The margin in Bitcoin contract trading is not paid to the exchange but is locked in when opening a position. If the trade fails or reaches the closing condition, investors can recover the margin and profits.
- Different methods of profit and loss calculation
Bitcoin spot trading calculates profit and loss based on real-time market prices, while Bitcoin contracts have two types of profit and loss calculations: fractional contracts and full contracts. The profit and loss calculation for fractional contracts is based on the value of 1 Bitcoin, while the full contract profit and loss calculation uses the full equity method.
Therefore, the profits and losses from Bitcoin contract trading are more susceptible to market price fluctuations and leverage, requiring different trading strategies to be developed for different trading methods to reduce risk.
- Conclusion:
This article introduces the differences between Bitcoin contracts and spot trading, as well as their advantages and disadvantages. Bitcoin spot trading typically uses real-time market prices, has no time restrictions, and allows for quick opening and closing of positions. Bitcoin contracts have fixed times and prices, require margin payment, and necessitate careful consideration of risks and profits, along with the formulation of appropriate trading strategies.