A comprehensive understanding: The real differences between spot, leverage, and contracts in the crypto world.

Spot Trading: The Most Basic Buy and Sell

Spot is traditional buying and selling - you pay money and I give you the coin. After buying BTC, this coin truly belongs to you, and you can transfer it to your own wallet or send it to others.

Advantages: The coins are in hand, the quantity never changes, and the mindset is the most stable. Disadvantages: Can only profit from price increases; if the coin drops, the only options are to either cut losses or buy the dip.

Margin Trading: Leverage Small Money for Big Orders

Leverage is borrowing coins from the platform to amplify investments - borrowing money/coins using collateral assets.

Long Position Scenario: If you expect a certain coin to rise, you take out 5000 USDT as collateral, borrow 10000 USDT and invest it, thus using 5x leverage to buy the dip. If the coin rises, you return the borrowed amount, and the remainder is your profit.

Short Selling Scenario: If you are bearish on a certain coin, you collateralize BTC, borrow BTC to sell for USDT, wait for the coin to drop and buy it back at a lower price using USDT, the difference is the profit.

Key Points: You need to pay interest on borrowed coins, and the operation process is relatively complicated (borrow coins → trade → repay coins). Exchanges generally offer leverage options ranging from 1 to 125 times.

Contract Trading: An Upgraded Version of Leverage

The contract has leverage built-in directly, eliminating the hassle of borrowing and repaying coins; you just need to choose the multiplier to open a position.

Classification Method:

• By Expiration: Perpetual Contracts (can be held at any time) vs Futures Contracts (automatically settled at the end of the week/next week/quarter)
• Settlement Method: Coin-denominated (profit and loss settled in coins) vs USDT-denominated (settled in stablecoins)

Comparison Overview of the Three

Real Digital Comparison

Scenario: An investment of 200,000 yuan, BTC rises from 2,000 yuan to 3,000 yuan

Spot: Buy 100 BTC (200,000 cost), make 100,000, return rate 50%

5x Contract: Control a position of 100 BTC with just 40,000 margin, earn 100,000, return rate 250%

Core Difference: With the same profit of 100,000, Spot used 200,000 in capital, while the contract only used 40,000, leaving 160,000 available to invest in other assets.

Risk Warning

Contract double-edged sword: while earning 5 times, it is also possible to lose 5 times. Insufficient margin will trigger liquidation (forced closing), and all positions will be instantly cleared. Newcomers must:

• Set stop loss and take profit
• Practice with a small position
• Timely supplement margin
• Do not go all in.

Which one should I play?

• Novice/Risk Averse: Spot, safety first
• Experienced/Want to increase profits: Leverage or contracts, but start with a small position
• Professional Trading: Perpetual Contracts, good liquidity, low cost