Spot, futures and leverage
SpotYou buy the actual coin. If it drops 30 %, you lose 30 %, but you still own it.
FuturesYou bet on whether the price goes up (long) or down (short) without owning the coin.
LeverageYou trade with more money than you have, lent by the exchange. x10 = every 1 % move is 10 % for you.
LiquidationIf the price moves far enough against you, the exchange closes your position and you lose what you put in.
With x10, a drop of just 10 % liquidates you: you lose 100 % of what you put in.
With x50, a drop of 2 % is enough — something that happens in minutes in crypto.
With x50, a drop of 2 % is enough — something that happens in minutes in crypto.
Most people who trade with leverage lose money. If you’re starting out, stick to spot.