Topic: few questions about trading - page 2. (Read 265 times)

Stop loss, stop limit and stop price are all the same thing, but stop loss and stop limit are most commonly used on exchanges. Theoretically, that is the definition of stop loss, to minimize the loss that could have happened, but practically which all traders would have experienced before is that stop loss has its own disadvantage, the market can correct itself back to the opposite direction to favor a trader, but if stop loss was used, the stop loss order could have been filled.

To be simple about what you have asked. Spot trading is just as simple as buy and hodl. The usual hodling of a coin either in your wallet or an exchange. You are suppose to buy low and wait to sell at your convenience on higher price. Here you don't lose the unit of your coin. That the unit of coin you bought is not lost only the value changes for higher or lower

Future trading include derivatives too. This is where real trading happens. You can lose your money. It is more risky. You buy or sell, you need a stop loss to avoid running out of balance.

Leverage is borrowed asset, money or coin to support your future trading. If you over borrow, it is risky. Sometimes 1-2 leverage or 1-1 ratio is better.

I think stop limit and stop loss are the same. Stop loss is simply to set a range to prevent your losses. Hope this can help you.

Spot trading is the basic type of trading, a trader buy coins and sell it. For example, you can be able to buy bitcoin, if the price increase, can sell for a stable coin and wait for bear market to buy bitcoin again. If you sell bitcoin to buy tether which is a stable coin pegged with USD, you have nothing to lose but gain if the market is bearish. If you buy bitcoin and the market increase, you will gain. If the crypto exchange support your local currency in your country, you can use it to trade unstable coins like bitcoin too.

Future trading is different, you can use future trading to leverage, which means while trading future derivatives, you can borrow extra asset.

It can be in 2x up to nx while n depend on the maximum leverage available on the exchange you are using. On some exchanges, you can borrow 100 times of your coins which will be 100x but also depending on the coin as they can have different maximum leverage. The more you leverage the more the risk.

For example, you leverage bitcoin at $40000 with 5x, if you have $100, you will be able to trade future with $500 which is 5 times of your money. Trading fee is not deducted in my calculation, but it will be very small.

Bitcoin at $40000
Trading fee is not included
5x leverage
If you buy (go long), your position will be liquidated at $32000
If you sell (go short), your position will be liquidated at $48000

You can go long (buy) or short (sell) in future trading. If you go short and the market price is decreasing you are making money unlike spot trading. If you also go long and the market is increasing, you are making money. Elsewise are losses.

You can trade future derivatives with 1x leverage, which means you do not have to borrow to trade, you can use your real money.

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I have not used OCO before but stop limit order and stop loss are the same thing, some exchanges can name it as stop price order.

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I consider going more than 3x for bitcoin to be overleveraging, over 1x or 2x to be overleveraging for altcoins, altcoins are riskier. But it also depends on how professional a traders is, the market and the type of the future trading.

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You can use 1x for future trading too but if going more than 1x, future trading is riskier.

I have a few questions about trading

1: what is the different between spot trading and futures trading.

2:  between Stop Limit or Stop Loss and
 OCO or order cancel order which is the safest for trading.

3: At what level is overleveraging.

4: between spot trading and futures trading which is highly risk and highly reward that uses leverages.