Market Types
Cryptocurrency exchanges offer different types of markets. MoonTrader works with two main types: spot and futures.
Spot Market
Spot market is a market where you buy or sell an asset with immediate delivery. You own the actual asset.
How It Works
When buying, you pay money and receive cryptocurrency. The asset is immediately credited to your account, and you become its owner. When selling, you transfer cryptocurrency and receive money. You can only sell what you own.
Key Features
Asset ownership — you own the asset, can withdraw it to an external wallet or use it for payments
Buy only — you can only open long positions, shorting is not available
No leverage — you trade only with your own funds (to buy 1,000 USDT worth, you need to have 1,000 USDT)
No expiration — you can hold the asset indefinitely without additional fees
Advantages and Limitations
The spot market is simple and straightforward, you actually own the asset, and there's no risk of liquidation. However, you cannot profit from price declines, and the full purchase amount is required.
Futures Market
Futures market is a derivatives market. You trade a contract for an asset, not the asset itself.
How It Works
You don't own the actual asset — you trade an obligation to buy or sell it. Settlement occurs when you close the position. You can open a long (betting on growth) or short (betting on decline).
Types of Futures
Perpetual — no expiration date, you can hold the position indefinitely. Funding rate applies. The most popular type.
Delivery — has an expiration date when the contract closes. No funding rate.
Key Features
Leverage — you can trade with an amount larger than what you have. 10× leverage means: with 1,000 USDT, you trade with 10,000 USDT. Increases both profits and losses.
Margin — only a portion of the amount is needed to open a position, the rest is provided by the exchange.
Liquidation — if the price moves against you, the position can be liquidated. You lose the deposited margin. The higher the leverage, the faster liquidation occurs.
Shorts — you can profit from price declines. You open a sell position and close it with a buy.
Funding rate — for perpetual futures, this is a periodic payment between traders. Depends on the difference between futures and spot prices.
Advantages and Risks
Futures allow profiting from declines, leverage increases potential profit, less capital is required, and liquidity is high.
Risks: high probability of liquidation, leverage increases losses, more complex for beginners, additional fees (funding).
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