Spot vs. Futures: Investment or Gambling? đČ
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The world of cryptocurrencies offers a variety of ways to participate, but two markets stand out: the spot market and the futures market. What's the difference and which one is best for you?
Spot Market: The realm of ownership. Here you buy and own cryptocurrencies directly. It's like buying shares in a company: you own a part of it. Ideal for long-term investors, following Benjamin Graham's philosophy of investing in intrinsic value.
Futures Market: Leverage and Risk. In this market, you speculate on the future price of a cryptocurrency, without actually owning it. It's like betting on whether the price will go up or down. Leverage allows you to multiply your profits (and losses!), but remember Graham's warning: "The margin of safety is always dependent on the price paid."
IF THIS WARNING IS NOT ENOUGH, YOU SHOULD BE CLEAR:
Leverage is a double-edged sword: It can amplify your profits, but also your losses.
Crypto market volatility: Prices can change dramatically in a matter of minutes.
Liquidation: If the market moves against you, you can lose all your capital.
Still want to get into the futures market? Then remember: this is a marathon, not a sprint. Allocate only 10% of your investment capital to this market. Trade a maximum of 3% of that portfolio on each trade and walk away if you lose 25%. Don't let the excitement of the moment ruin you. Don't let the whales use you as market liquidity.
Conclusion:
The spot market is ideal for patient, long-term-focused investors. The futures market is for experienced traders willing to take higher risks in search of quick profits. Choose wisely!
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