Cryptocurrency Trading Explained: Spot, Futures, Leverage, Fees and Risk

Crypto trading means buying and selling cryptocurrencies in a spot market, or trading contracts whose value is linked to a cryptocurrency’s price. In spot trading, the underlying asset changes hands. In futures trading, the trader takes contractual price exposure and may never receive the cryptocurrency itself.

That distinction affects nearly every part of a trade: whether a person needs to manage custody, whether they can take a short position, how much capital is required, and how quickly losses can develop. Both routes also carry the broader risks of volatile markets, thin liquidity and platform failures.

Spot trading: buying the cryptocurrency itself

A spot transaction is a cash-market purchase or sale of the underlying cryptocurrency. Someone who buys bitcoin on spot, for example, has bought bitcoin rather than a derivative contract based on its price. The Commodity Futures Trading Commission describes virtual-currency spot trading as buying or selling the underlying asset in the cash market.

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