Market Types
A good understanding of market types plays a key role in choosing your trading system and trading style. Let's take a look at the types of market analysis provided by the TRDR platform.
There is 3 market types: - Spot - Perpetuals - Futures Each market is represented by a corresponding contract of the same name.
Spot Contracts
Definition: Spot trading involves buying or selling an asset (like BTC, ETH, etc.) for immediate delivery. You own the actual cryptocurrency.
Settlement: Instant. The asset is transferred right after the transaction.
Leverage: No leverage is typically involved.
Use Case: Ideal for investors who want to hold the actual coins or tokens long-term.
Perpetual Contracts (Perpetuals)
Definition: A type of derivative contract that doesn’t have an expiration date. Traders speculate on the price of an asset without owning it.
Settlement: Never expires, but positions can be closed manually or liquidated.
Leverage: High leverage is available (e.g., 10x, 50x, or more).
Funding Rate: Periodic payments between long and short positions to keep the price close to the spot market.
Use Case: Popular among short-term traders and scalpers who want to profit from market movements without owning the asset.
Futures Contracts
Definition: Agreements to buy or sell an asset at a predetermined price on a specific future date.
Settlement: Settled on the contract’s expiry date (e.g., weekly, monthly).
Leverage: Also allows leverage.
Expiration: Unlike perpetuals, futures have a fixed expiration date.
Use Case: Used for hedging and speculative strategies. Useful for managing risk over a known time frame.
Summary Table:
Asset ownership
Yes
No
No
Expiration date
No
No
Yes (e.g., quarterly)
Leverage
No
Yes
Yes
Settlement
Immediate
Open-ended
On expiry
Funding rate
No
Yes (every few hours)
No
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