Spot Trading Vs Futures Trading: What's the Difference?

in cryptocurrencyindia •  4 years ago 

If you are planning to buy and sell cryptocurrencies and grow your investment portfolio, the selection of cryptocurrency exchange platforms holds significance. Almost all major crypto-broker exchanges accept fiat money (EUR, INR, USD, etc.). The deposits are generally free, but a fee or commission is levied upon withdrawal. However, only a few to the likes of PCEX Member offers trading in crypto futures. Hence, anyone can trade crypto in INR, and with prudential forward-thinking can earn more with less because in crypto futures investment, you earn without actually owning an asset.

If you are new to crypto futures, here is a quick overview.

Crypto Futures is a trading option, where you can earn an unlimited income by placing just a token money (a fraction of the total asset based on its future price) with the crypto exchange. You speculate the market sentiment at the time of expiry of the futures contract and confirm to the agreement.

To explain it further, “ Suppose A got into a contract with PCEX Member for Bitcoin Futures. He has to select the lot size available on offer. For example, a lot size of 5 BTC is available at an 8% margin. He will buy the Futures Contract and pay 8% of the value of 5 BTC by speculating that by a specific timeline, the prices of BTC will be high. So, if on the expiration day of the contract, the speculations are not right, A tends to lose and someone else who had a negative sentiment about the market wins. The exchange charges a trading fee for streamlining the transaction or encashing on the expiration date.

So, if it comes to the top 10 exchanges to trade crypto futures in India. The rating is based on Web Traffic; Average Liquidity; Volume, Fees, Ease-Of-Use as well as the Confidence that the volume reported by an exchange is legitimate.

PCEX Member

PCEX Member is India’s most user-friendly, comprehensive, and secure cryptocurrency trading platform. It handles a transaction volume of USD 2.5 billion every 24 hour. High liquidity, smaller lot size, and lower transaction fees have made it a heaven for inventors - big and small. The exchange allows trading in all popular crypto asset’s contracts, including Bitcoin (BTC), Bitcoin Cash (BCH), Ethereum (ETH), Ethereum (ETC) and Litecoin (LTC). PCEX supports an array of fiat currencies including INR.

Pros

Traditional futures trading options

Multiple lot sizes

Lowest Margin rates

Competitive futures products

Cons

None

Transaction Fee: A flat transaction fee of 0.3% for Futures Trading applicable

Binance

As of January 2020, Binance is the largest cryptocurrency exchange in the world in terms of the trading volume. Its 24-hour crypto futures trading volume stands around USD38.9 billion. The exchange platform allows trading in around 322 cryptocurrencies, including Bitcoin, Ethereum, and Cardano. It has recently started accepting fiat currencies at the beginning of 2021, and supports 45 fiat currencies including INR.

Pros

Lowest transaction fee in the industry

Cons

Might be a bit difficult for beginner crypto enthusiasts

Transaction Fee: The maker or buyer fee is 0.02% and taker fee is 0.04%.

Bybit

Established in March 2018, Bybit is one of the fastest growing crypto futures trading exchanges. It has more than a million registered users. Bybit helps you trade in popular crypto assets including BTC, ETH, XRP, EOS, ETH, LTC, and XTZ.

Pros

Investors are paid here, see the fee section.

Cons

Not-so-friendly user interface

Transaction Fee: The fee for makers is -0.025% and for takers it’s 0.075% per order.

Kraken

Established in 2011, Kraken is a US-based cryptocurrency exchange. Its 24-hour crypto futures trading volume stands over USD 622 million. The exchange allows you to trade in 59 cryptocurrencies including Bitcoin, Ripple, Ethereum, Bitcoin Cash, and Litecoin. Kraken’s price information is also available with Bloomberg Terminal. Kraken played a role in attempting to recover funds lost by investors during the 2014-15 Mt. Gox implosion. It doesn’t support payment through INR, but you can use supported fiat currencies including USD, EUR, GBP, CAD, JPY, CHF and AUD.

Pros

Low transaction fee

Cons

Not-so-good Customer service

Transaction Fee: The trading fee for maker is -0.02% (they are paid to invest), and for maker it’s 0.075%.

Bitfinex

Globally, Bitfinex ranks 6th with a trading volume to the tune of USD91.2 million. It supports asset trading in 145 cryptocurrencies. Currently, it doesn’t accept INR as a fiat currency, but you can trade in supported currencies including USD, EUR, GBP and JPY.

Pros

Low transaction fee

Cons

Not-so-satisfactory customer service

Transaction Fee: Trading fees are between 0% and 0.1% for deposit makers and between 0.2% and 0.055% for takers.

KuCoin

The KuCoin Exchange handles a trading volume to the tune of USD5.8 billion every 24 hour. It supports trading with 254 cryptocurrencies including BTC (Bitcoin), ETH (Ethereum), LTC (Litecoin), XRP (Ripple), KCS (KCS). You can use a credit/debit card (Simplex, Banxa, PayMIR), bank transfer, PayPal, or SEPA option to carry out transactions.

Pros

· Very simple to use – perfect for beginners

· Anonymous trading

Cons

Liquidity issues with smaller coins

Transaction Fee: The exchange has a diversified fee portfolio with 13 levels (LV0 to LV12) based on the trade volume. For below USD100 (LV0), it’s 0.02% for makers and 0.06% for takers. For USD≥160000, the maker and taker fees are -0.015% and 0.03% respectively.

OKEx

The worth of the crypto trading volume at OKEx stands at USD7.1 billion every 24 hour. OKEx was launched in 2014 and is headquartered in Malta. Buy and sell BTC, ETH, XRP, OKB and other digital assets with ease. Apart from futures, OKEx provides spot, margin, options, and perpetual swaps, DeFi, lending, and mining services.

Pros

BTC Dominance: (68.6%)

High liquidity

Cons

Larger lot size that takes time to fill

Transaction Fee: The maker fee is 0.02% and taker fee is 0.05%

BitMEX

The market capitalization of BitMEX stands around USD944.8 billion and it handles nearly USD152 billion trading volume in every 24-hour. BitMEX was founded in 2014 and is headquartered in Seychelles, an island country. It allows investors to trade in Bitcoin, Ethereum, XRP, Bitcoin Cash, Litecoin, EOS, Binance Coin, and other cryptocurrencies.

Pros

BTC Dominance: (68.5%)

High liquidity

Cons

none

Transaction Fee: The maker fee is -0.025% and taker fee is 0.075%.

Bitget

Founded in 2018, Bitget is a leading cryptocurrency derivatives exchange. The company is headquartered in Singapore. The platform has over 1 million registered users worldwide. Its market capitalization stands over USD935 billion, and witnesses approximately USD152 billion volume trading every 24 hour.

Pros

BTC Dominance: (68.4%)

Fast Deposit/Withdraw

Cons

Larger lot size

Transaction Fee: The maker fee is 0.04% and taker fee is 0.06%.

FTX

The market capitalization of FTX stands at USD936.4 billion and the exchange handles approximately USD152 billion every 24 hour. Top cryptocurrencies traded on this exchange are BTC, ETH, LTC, and BCH. It accepts fiat currencies including USD, EUR, HKD, SGD, GBP, CHF, ZAR, AUD, and CAD

Pros

Trading website has a user-friendly interface

Two-factor authentication

Cons

Larger lot size

Transaction Fee: FTX has a tiered fee structure. The maker fee stands between 0.02% and 0.01%, and the taker fee is between 0.07% to 0.04%.




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