Topic: Long term investing - Spot, Margin or Derivatives? (Read 520 times)

I think that by jumping right in and trying future trading without maximum preparation, of course it's just a waste of time and in the end we lose money easily,
think well before doing something and make sure we have the knowledge and skills,
obviously don't try to play in crypto because the risk is losing money

I'm wondering why not just buy on spot so it would be also stress free for you? I haven't seen anyone that invested in derivatives for their long term investment in crypto. There is also funding fee on derivatives which increases your liquidation price as long as the trade is open. You'll just lose money again if you're really planning to open a position at $14k and leave it for a long time. No one knows if your target price of $56k will certainly happen next. What if bitcoin's price will just consolidate between  $15k-20k for some years then your suppossed to be profit just went to funding fee.

Margin and derivatives trading are for risk takers. It has more risk than Spot trading. If a trader can not succeed in Spot trading, it is impossible to succeed in Margin and Derivatives tradings.

You are right that Spot trading is easier to handle and if you fail with your analysis or projection but you pick a good asset like Bitcoin, you can turn from trading to long term holding. It is still good enough.

Back to topic title and discussion, personally it is incorrect to include Spot, Margin and Derivatives into Long term investment. These ones are trading, not investment. Investment means buying something, Bitcoin ie. and store it in your non custodial wallet a long time.

It's sad that so many newbies try futures trading without learning it first. The newbie wasted his money in vain, and the annoying thing is that
there are some newbies who have lost their money due to losing in futures trading, so blaming crypto as a whole, just because they don't accept
the losses they've suffered. That's because too many influencers who show off their success make huge profits from futures trading. So many
newbies are influenced by these influencers, which is why newbies should be willing to check every information they get.  So don't just believe
what other people say.

In fact, futures trading is not for everyone, because the risk is very high. Only people who have good trading skills and are also experienced in
the crypto world, can generate satisfactory profits from futures trading. Because for me futures trading is the highest level in the crypto world.
Therefore, if we want to succeed in futures trading, we must start mastering spot trading first. So there must be stages that must be passed first
before we finally try futures trading.

today many novice traders even directly trade futures. no matter where they learn from, but without enough experience, futures trading will only lose their money.
if they profit from trading futures, I guess it's just a coincidence of their guesswork.
spot trading I think will be more friendly, for beginners or even those who are already pros. because some traders do like the spot and don't like other trades.

Futures and spot could really be never the same.You are simply contradicting on what you are saying.Speaking about impermanent loss then thats the beauty when you do spot.
When you are just still a noob then it would be that sensible and understandable that you shouldnt really touch up things which does require sufficient skills and experience
in the market.Dont make yourself in a hurry so that you wouldnt be ending up lots of mistakes.

You'll find out soon whenever you do able to experience futures/leverage or derivatives.

I feel like the question could be would you prefer long term? derivatives? spot? margin trading? Like not which of these three for long term, but more like which of these four would you prefer? That is why I was thinking about long term would be better for me, but that's a personal thing and I prefer it that way, maybe I am wrong, maybe you would be better with margin trading, maybe the other person would be better at spot, it all depends on what you are accustomed to do.

Simply, doing DCA with bitcoin for years to decade would be the better option for all of us who believe into the future of bitcoins. Buy bitcoins regularly and send it to your cold wallet and track your progress in bitcoin explorer and that's all; finally you will find yourself a millionaire without risking in any type of trading.

Tbh, I was confused and was like have I been doing the wrong thing this while? I know the future and margin options are for day traders and not for longterm investors. I am investing on a long term and I do that not on an exchange but in a personal wallet that I don't access often.
Even a friend of mine went to cold storage, I was just reasoning how he will begin to apply future trading in his cold storage.
The options Op listed above are for trading and not for long investing, unless he keeps his coins in an exchange for long investment, which is not ideal.

I highly agree I have lost a lot of money on future trading, and I would say that spot trading is recommended since you can only get an impermanent loss while you can gain profit over time if the market goes up again.

And spot trading can only be the same as futures trading if you trade with bigger funds or volume.

That's what makes Margin or Derivatives risk bigger than spot trading. only in spot trading, of course, have to choose the right asset. if the wrong choice of assets, of course, the long term or short term will be useless.
people with simple market analysis skills, of course, prefer spot trading. this will make the trader less risky, not without risk. because all trades I think have their level of risk.

If you want to maximize your gains over a long time of holding, sure Margin or Derivatives is there for you. But as always, they're very risky and if you approach the market at the wrong angle, your loss will be much higher than just a simple Spot investment. To be honest, I think it's really up to you, to see if the gains are worth the risk or not. In my opinion, a long-term period of time in crypto is very hard to predict, too variable. Margin or Derivatives should be on the short-term investment, as long as you see a nice enough gain and profit, get out. Spot is more for the long term cause you ain't at risk if you keep holding it, as long as you've invested in a good altcoin or ETH and BTC.

therefore many traders are more comfortable using spot trading for them. I'm not saying the other trades are not good, they can get more profit. but of course, the risks faced would be greater.
for those who want to develop skills in trading, it is not a problem. but for me, who have very little experience and skills in trading, will prefer to trade a spot.

I do spot, either coin disappear or gives massive gains in few years timeline. Margin/derivatives trades are time bound afaik. I do not trade those, dipped my toes a couple times, lost some and gives anxiety.

This is true in crypto trading because of the liquidity and the risk involved. Using a trading tool that has interest and liquidation risk on volatile market is really not efficient in long term because the price volatility is already enough for profit multiplier in crypto rather than risk everything on one single price swing if the market moves in opposite direction of your position.

Spot is really the best for long term not efficiently but safely.

It's a long list if you'll look at the rankings but just to be safe, rank 1 and 2 are the best option and we all know that they are - BTC and eth. And about having that feeling of going down, it's your take to sell them anyway but if you're holding bitcoin and you're not even close to break even, are you going to sell as it goes down? I don't think that you'll take the losses and you'll sell bitcoin and you'll remain with nothing but a reduced capital that you did because of being not patient.

No, it's not what you think. Hold your money on centralized exchanges like you are depositing your savings in a bank, they can freeze your account any time or worse, the exchange crashes and you lose your assets. Money on a centralized exchange is not yours.
Unlike exchanges, non-custodial wallets like trustwallet or metamask, you are the only one who holds the keys and only you can access and use your property.

Looks like you need to learn more basics to get ahead in the market. I recommend equipping you with more knowledge before looking at investments or trades you are making, such as spot or derivatives...

The additional thing is you can stake the altcoins/Bitcoins you bought from spot trading to some platform like a centralized exchange or some DeFi platforms, because here, on spot trading, you will literally hold the real coin you bought, compared to derivatives like the futures market, which will only stay on the exchange.
Especially in a markett like these times, it's very risky to trade with high leverage if you are doing long, so spot for me is the safest.

If you ask me that question then my answer will be spot trading because here you can hold your fund like decentralised wallet.  And decentralised Wallet is the best for holding big fund for a long and cold wallet can be use for it . So if anyone wanna invest for long-term then choose spot trading for it and if the fund is big then use cold wallet for holding.

Spot is the best if you want to play safe and less worry for liquidation if the price get sour at the time you enter. Margin trading is the best if you want to get additional capital and to earn more with risk but manageable if you have enough capital to extend the liquidation margin to safe level but make sure to use only the leverage that your margin can handle and gives enough room for liquidation price margin.

Leverage trading is only good for short term trading since it has funding rate and liquidation price margin is very small than Margin trading so I don't recommend it for long term use unless you are onky using x3 below leverage.

The spot market is indeed a trader's choice because it is safer and more comfortable than trading on futures,
but there are things that you may all forget that trading in the spot if you are wrong in buying and are greedy then of course you will still lose,
for example you buy Bitcoin priced at $60k and you hold until the current price because you have a reason Bitcoin will go to $100k,
yes that's an action that should be avoided in the spot market, because it will make you lose.

only few coins are worth holding long-term. this is why if you will venture on coins outside the top 10, you need to be very cautious with their market performance. if you feel they are about to go down, better sell it while you can. futures is only for those who know what they are doing. spot trading is good for starters, at least get the grasp of crypto trading. once you are getting good, you can explore other types of trading. but you need to start small so you won't lose much.

You're likely to lose more there than holding if you're for the long term. Long term doesn't mean that you have to actively trade and get the maximum profit. Someone who's aiming for that is losing more than the others who are chill with holding and does nothing.

Don't forget that in spot, losing is part of it and it's inevitable. There are traders that lose more than profiting whether they are on the spot or margin.

Spot is the most productive side for the long long term investment as Low risk and also highly recommend for maximum profits. I know that Future trade is more attractive in term of the profits but as there is high risk for the investment according to the market sentiments in long term there is no place for the Future trade. Spot is a best option where surety of profits can be managed.

Test a strategy and lose $35k in the process? I think that's a lot but anyone can use a small capital first when they know that it was only a test run and they are not sure if the results is going to be positive or not. Anyway, he cleared it out that what he did at first is investing and maybe he is investing blindly and ended up picking the wrong coins. It's only great tho that he didn't give up after losing massive and it seems he is learning now because there he is, asking if the new starts that he is using are correct.

@OP I think you are doing fine with it, as you said you are seeing some positive results now. Just continue doing it and I hope you will soon recover all of your losses.

Trading or investing? If we are talking about investment then it should be a little bit more long term, which means it does happen via spot, but its basically buying something and holding it for a very long period of time until it makes you money. On the other hand if we are talking about something like trading, then these three would matter based on how good you are with them, doesn't matter which one you do, as long as you are good at it. I could make a lot of money via spot, but lose a lot on margin, you could be great at derivatives but lose on spot, its not how you do it, its how well you do it that matters.

Long term investment in margin or derivatives trading is much risky to be liquidated.So we should go for spot trading for long term investment.And we should enter the market in the bear session for the maximum profit for long term holding.

Thanks for all of your replies - it's nice to see a forum and community who are actually trying to help and advise rather than condescend a newbie 

I realise that the most common and less risky way to invest long term is to purchase a coin/token through Spot on an exchange like Binance or KuCoin and then transfer the coin/token to a wallet like TrustWallet or MetaMask (as this is considered safer than keeping the coin/token on an exchange)...

If however, hypothetically speaking, we lived in a world where exchanges were perfectly safe and you didn't need to move your crypto to a wallet... and in this hypothetical world I wanted to purchase crypto with a 2x leverage, I was just wondering what the downside (apart from safety) of keeping a long term trade open in Derivatives would be....

From what I can gather through your replies, it seems as though another downside of going down this route (apart from safety) would be that keeping your trade open in Derivatives will accumulate fees that would not be accumulated in Spot.... How do these fees work?

Using my initial example which I have quoted below….
 

In an example like the above, how much in fees can I expect to pay over a year?

I didn't think you are an idiot. It's just that you test a strategy and since we don't know what will happen next, you end up losing on the process. That's a wonderful experience I should say and not a dumb thing that you did.

What kind of strategy should you do now, I think you already know it but there's a worry that it might lead to you again losing.

I won't say any advice but just continue testing some strategies until you found a working one that's fit on your long-term goals.

Me too, I'm confused.

Just like what everyone else have figured out about long term investing and putting that into those things that OP has mentioned, it's like keeping it there for long and that's not an advisable thing to do.

Those three that has been said are the trading features where an exchange platform has to offer for every user that they have.

I don't find any significance for telling that if you're going long term, you should put it on spot, derivatives and mostly in margin.

It's misleading and if a newbie thinks of that and putting it long on margin, well, just a matter of time and he'll receive a text of being liquidated.

Before you continue trading or investing, of course you must understand the meaning/difenising of the three trades, as you said, namely: (spot, margin and derivatives).

Before that you need to know in detail what is called spot trading, Margin and Derivatives, for that you can understand the meaning of the three trades, below.

After you understand the three trades, you can conclude what trading methods are worth using or long-term investments, I can suggest for you the right long-term investment method you do is the spot method.

Margin and Derivative methods are not appropriate / suitable if you use it as an investment method, the two methods that are the most appropriate for you to do are trading, because they have a third party.

I am not find any connection with Spot, Margin or Derivatives for long term investment. Spot, Margin or Derivatives just a different trading system. if you want to keep holding your investment coins then you must keep your coins on your personal wallet or any exchange long time as much as you want. here spot can help you if you want to hold your coins in any exchange account

I don't think that you should let it stay on the spot market when you're just going for long term. Like the majority's concern about holding in an exchange, you have no full control to your crypto there.

Yes, we do purchase in exchanges and should be a norm to keep them in hardware wallets or those wallets good for long term not with exchanges.

It should be remembered that with margin trading, your position may be liquidated and you will completely lose your money. In addition, margin trading implies the use of borrowed funds of the exchange, and you will need to pay an hourly commission for its use. So a spot purchase will be safer for you, although it will bring less profit than using margin.

Investing in cryptocurrencies is of course very convenient to do through the spot market,
I'm sure 99% of people in this world will also make purchases in the spot market and store them in a wallet,
whether it's a hardware wallet or a software wallet. For sure Spot market is the first and easiest choice to buy Bitcoin and altcoins.

Which one trading kinds do you wanna try despite your decision with short or long term trading, I saw you try leverage of 2x and looks want to trade on future trading, I don't think most recommended way exactly with long term with future trading because you have pay fund fees with this kind trader. Have promising with much profit earn than spot trading but I don't think long term holding need pay fund fees in future trading, better if try with long term trading better with spot only without try with future trading have bigger risk if suddenly miss out from your price predicting, although you try to open long position with bitcoin.

Spot trade have less risk because your investment funds as bitcoin keep safety without paying fees every days different when your use future as your long term investing. However when price drop from your invested still have bitcoin assets although values drop, different with future you will get notice with liquidation and loss all your bitcoin investment.

Binance is a good exchange but for long term purposes, it is still good to have it on your own hard wallet which you can have the control, and away from any institution which might affect your investments later on. Though if we are talking about long term trade here, I mean for just months then spot trading is really the safe option. Your profit for long term is also not guaranteed, so make sure to buy only the good coins for your long term purposes.

So sorry to hear that. But as your experience, not all projects are valuable and survive to have a brighter future. Many are shit projects or scam projects. That is why I personally always avoid new projects, moreover that have not been listed in any exchanges or listed on DEX or low cap exchanges that only utilize the pump and dump process. this is high risk.
It is true also that we need to diversify our money into several coins investment. But it doesn't mean that we must invest in numerous shit coins.
It is better to invest in Bitcoin at first, and top coins. At least, we can decrease the risks. However those top coins are also valuable for long-term investment, althoguh right now the price still decreasing, but I beleive that this will be able to rise up in the future.

Since you lost a lot I will prefer long time investment. So hopefully once a time you can recover your lost funds. It's normal when people enter first time in crypto they lost a lot due to no experience with the crypto movement. Who thought Bitcoin would be below $20K? Everything is possible in cryptocurrency, we don't know where is the exact bottom. But you shouldn't be selling your holding in too much loss. What is the benefit then if you can't hold a longer? Once dump means dumped, have to wait for recovery. Because you already lost, it won't be recovered if you sold. But you have to choose the right coin, not a shit coin or pump dump coin. That's how you will be lost your portfolio too quickly.

If you don't know what's the purpose and how to use margin, just don't get your hands on it. The farther, the better and if you're into long term investing.
It's all about just keep on holding and it's up to you on how long is that hold you'll do. Because, you can just put it on a wallet, where you're holding the keys.
Unlike putting it on an exchange like what you're planning to, you don't hold the keys there.

Don't add such leverage to your long term trading capital which simply add the risk and it may lead you to close at the wrong position and ends up wrecking again. So just spot trading is good and you will have all your assets on your wallet and comparatively less risky. So as you said in the example you still can make 300% return if Bitcoin reaches new ATH which is too good in practical terms.

Investment for the long term which I think is very safe and comfortable of course I choose to invest in the Spot Market and choose the Binance platform to hold altcoins there,
I choose the Spot market because I'm used to trading there, and for derivatives and margin I still don't understand it, it's just that it's a little more complicated.

Based on the title you made, long term investment means that the investment you buy is not used for any other reason except for holding it for a certain period so you have to hold it without being used for trading.

I don't think it has anything to do with spot, margin or derivatives because investing means holding, as I said. This benefits many people who do not master trading, especially in analyzing market movements to avoid mistakes.

The ground you walk on is slippery, and just when you think you are standing stable, you slip and fall. Getting up is of course a difficult process, especially for those who cannot afford to lose $35k and start all over again. However, I would emphasize here that the key thing is to learn from your mistakes, and although I generally understand the need of some investors to invest in "numerous difference projects", I cannot escape the impression that they are making the same mistake again and again.

9 out of 10 such projects will fail in the long term (in less than 4 years), so it all boils down to the perfect timing of when to buy and when to sell. Everything else is speculation, including the fact that the price of Bitcoin must fall below $15k, which is not impossible, but there is also a high probability that it will not happen.

1. I think there is calculator on their site or app, might be best to use it or using this excel sheet that is downloadable here (will just code it so it wouldn't be mistakenly clicked by anyone):

2. Same as to number 1, the calculator will be best here since for a year that would occur lot of fees too on your open position.

3. Saying benefits is subjective, personally, for me, Spot has low risk compare to what does margin do but if you're correct on your position then it's totally profitable. They're apple and orange, same to be labeled as fruit but they definitely have differences.

There are different strategies that you can use. You can DCA, you can also wait until the price you want is achieved, but bitcoin may never get to $14000. If you do not DCA and bitcoin has not gotten to $14000 some weeks before halving, I will advice you to just invest.

Derivative trading is very risky, best to get specific coins like bitcoin for it. Some traders would trade shit coins and continue losing, know that altcoins are more volatile, if you increase the margin ratio, it won't be good.

You are now patient, just do not trade, best to just hold which is better. You can leave the coin after you buy it until 2025.

I will have to say this again, do not use derivative trading for altcoins, than to long it and not using more margin ratio, the best is to even buy them, move them to your noncustodial wallet.

Thanks for the advice but these are only hypothetical queries so when reading them please imagine, hypothetically, that wallets don't exist and exchanges are the only place to hold crypto.

Long term investment is not related to Spot, Margin or Derivatives.

When you invest long term, you must keep your coin in your wallet, not on exchange. If you mean Spot, Margin or Derivatives, you must store your coin at exchanges. That is bad in security for your coin and capital.

In addition, if you invest and store your coin at exchange, you can easily to go with trading because it is very convenience to trade on exchanges. Then you will change from long term investment to trading and it is bad.

I'm one of those idiots who invested in a bunch of coins/tokens at the top and lost a load of money - around $35k in total 

I sold all of my coins/tokens a few months back but I will be reinvesting in numerous difference projects again when, or if, BTC goes down to $14k - which I believe will be somewhere close to the bottom.

Since losing the $35k I started trading using ByBit Derivatives and it's helped me to understand the whole crypto scene a lot more. I lost another $5k when I first started trading but since then I've done pretty well (mainly shorting) and I reckon I'm now around $2-3k up with the trading in total. I'm still massively down overall since getting into crypto though

Anyway, regarding long term investing and whether I should use Spot, Margin or Derivatives... My plan is to invest in loads of different coins/tokens but if we just use BTC as an example...

EXAMPLE

If I purchase $1000 of BTC using the ByBit Derivatives pair BTC/USDT (i.e. using USDT to purchase the BTC) and I buy the BTC when the price is at $14k using a leverage of 2x, please can someone tell me if I've understood the following scenarios correctly:

1 - If, in a years time, the BTC price goes up from $14k to $56k, that would mean the price has multiplied by 4. That being the case, my investment of $1k USDT which I leveraged at 2x (so effectively invested $2k) will go up to $8k, resulting in $7k profit... Have I understood this correctly?

2 - If conversely the price of BTC goes down from $14k and I do not put in any kind of stop loss, at 2x leverage I estimate my liquidation price would be roughly half of $14k so around $7k (maybe just over)... is this correct?

3 - If I've understood both the above scenarios correctly, what is the benefit in using Spot or Margin? It seems to me that Derivatives does exactly the same as Spot and Margin with the added benefit of additional leverage if required! Is that not right?