Spot vs Futures Crypto Trading: Fees, Leverage, and Liquidations

Spot trading means buying the asset directly. Futures let you speculate on price with leverage. The risks and costs are very different.

Spot trading basics

• You own the asset
• No liquidation risk
• Fees are straightforward

Futures trading basics

• You trade contracts, not the asset
• Leverage is available
• Funding rates apply

Key differences

• Leverage: only in futures
• Risk: liquidation risk in futures
• Costs: funding fees can add up

Liquidation explained

If price moves against a leveraged position, the exchange closes it to protect the loan.

When each makes sense

• Spot: beginners and long-term holders
• Futures: advanced traders with strict risk rules

Safer futures rules

• Use low leverage (2x to 5x)
• Risk 0.25% to 0.5% per trade
• Set stop loss immediately

Next Steps

1. Crypto Trading vs Investing - Pick the right approach
2. Risk Management Guide - Build safe rules
3. Position Sizing Guide - Keep size under control

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About the Author: Pip Campus Risk Team - Focused on protecting traders in high volatility markets.

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