AI Summary
This video explains the differences between spot trading and futures trading in simple terms, highlighting their risks and benefits. The speaker advises beginners to learn through their advanced crypto trading course before engaging in either type.
Chapters
Spot trading is like buying gold at a low price and selling it later at a higher price. You own the asset and can hold it even if its value drops.
Futures trading allows you to sell an asset you don't own yet, profiting from price declines. It involves leverage, which amplifies both gains and losses.
With 10x leverage, a 10% adverse move can result in a 100% loss. Leverage is risky but can magnify profits if used correctly.
A 20% price increase with 10x leverage yields a 200% profit, compared to only 20% in spot trading.
Many traders suffer losses due to lack of knowledge. The speaker recommends learning through their advanced crypto trading course before trading.
Spot trading is safer for beginners, while futures trading with leverage offers higher potential returns but greater risk. Proper education is essential before engaging in either.
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Mentioned in this Video
Study Flashcards (5)
What is spot trading?
easy
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What is spot trading?
Buying an asset at a low price and selling it later at a higher price, owning the asset in the meantime.
00:53
What is futures trading?
easy
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What is futures trading?
A contract to buy or sell an asset at a future date, allowing you to profit from price movements without owning the asset.
01:18
What happens if you use 10x leverage and the market moves 10% against you?
medium
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What happens if you use 10x leverage and the market moves 10% against you?
You incur a 100% loss.
02:15
How much profit would a 20% price increase yield with 10x leverage?
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How much profit would a 20% price increase yield with 10x leverage?
200% profit.
02:45
What is the main risk of futures trading compared to spot trading?
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What is the main risk of futures trading compared to spot trading?
Futures trading uses leverage, which can lead to total loss of capital if the market moves against you.
02:15
π‘ Key Takeaways
Spot Trading Definition
Provides a clear, simple analogy for beginners.
00:53Futures Trading Mechanism
Explains the counterintuitive concept of selling before buying.
01:18Leverage Risk
Highlights the dangerous potential for total loss with leverage.
02:15Leverage Profit Potential
Shows the amplified gains possible with leverage.
02:45Full Transcript
[00:01] Many people ask me this question: what trading should we do? Which trading is best for us? In which we will be on the safe side? Which trading can cause us losses? Please suggest what we should do. Today I will explain
[00:14] both things to you in very simple terms: what is spot and what is future. for yourself. In fact, as you watch the video, you will understand whether you want to do spot trading or futures trading, or whether you want to
[00:27] lose and get addicted to both. I will advanced course on crypto trading, in which we teach crypto trading from basic to advanced. If you are not a part of it, then
[00:40] go to our YouTube playlist and go there and watch the complete course. Our crypto trading advanced course so that you can learn how we can take advantage of all these. So let's start the video with things.
[00:53] First of all, let's understand what spot trading is. Spot trading in simple words is like buying gold at a low price and selling it later at a high price. Apart from gold, there are also cheaper things that you do, like
[01:05] buying something at a low price and selling it later at a high price. That's simply spot trading. But futures trading is a little different in that you can buy it, you you can buy it, you
[01:18] buy it later. Isn't it interesting that you haven't even bought anything and you have to sell it, and you will make a profit from it. Basically, it is sold like this: you tell your broker or the exchange, for example, let's take this mobile phone for
[01:30] $100. I tell my broker, " Sell it for $100." He sells it. The very next day, the rate goes down further, it goes to $80. I tell the broker, "Now buy it, broker, you can sell it for me too."
[01:42] buy it, broker, you can sell it for me too." Now if the broker buys it,
[02:01] This is how you can benefit on the sell side. In spot trading, if you buy something, say a mobile phone and keep it. If its price starts falling, its value will become zero. This mobile phone will remain with you and will remain your property. Okay,
[02:15] this is one advantage of spot trading that you bought it for $100 and its price will become $5, but you have the mobile phone. What will happen in futures trading? The you must have taken leverage. If you have taken 10x leverage and the market moves to 10, you will become
[02:32] 100% zero, you will incur a 100% loss. Therefore, futures trading is a little risky. Using leverage is not bad. If you understand leverage, there is a huge benefit for you in that you can make a lot of purchases with a small amount. Let me give
[02:45] you an example: if you bought something for $100 in spot trading, its price will become zero. If it was made at 120, that is, 20, then you would have made a profit of only $20. If you had taken it with 10x leverage and used 10x leverage, then with a
[02:59] 20% increase, you would have made a profit of $200. Do you understand my point? Both things give huge profits in their own places, but if you have learned, many people experiment with such things and make losses, they lose
[03:14] lakhs and crores of rupees. Many people come to me should do, how they can get profit, how they can avoid loss. Many people come to learn these things after making losses.
[03:27] But if you are entering this thing, are new and want to learn, then I would advise you that in our advanced course of crypto trading on youtube, you can learn things from basic to advanced level and will become
[03:41] capable of earning. You may be earning from trading, but there are some advanced standards, on which you need to ask proper questions. I need to answer the questions, I need to bring some charts, I have to check them,
[03:54] I have to tell you whether the work you have done is right or wrong, mentorship sessions for that, I also charge for those things, but right now you have a great opportunity to take our advanced course on crypto trading