# 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.<br>

<figure><img src="/files/UJ357Azjakqy12SnVm9h" alt=""><figcaption><p>Markets Types</p></figcaption></figure>

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:

| Feature         | Spot                                      | Perpetuals                                                  | Futures                                                     |
| --------------- | ----------------------------------------- | ----------------------------------------------------------- | ----------------------------------------------------------- |
| Asset ownership | <mark style="color:green;">**Yes**</mark> | No                                                          | No                                                          |
| Expiration date | No                                        | No                                                          | <mark style="color:green;">**Yes (e.g., quarterly)**</mark> |
| Leverage        | No                                        | <mark style="color:green;">**Yes**</mark>                   | <mark style="color:green;">**Yes**</mark>                   |
| Settlement      | Immediate                                 | Open-ended                                                  | On expiry                                                   |
| Funding rate    | No                                        | <mark style="color:green;">**Yes (every few hours)**</mark> | No                                                          |


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