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🟢 #6 Trading Intro: Spot, Futures, and Swaps — What's the Difference?

Now that you understand blockchains, tokens, and how to evaluate projects, it’s time to explore the most common ways people actually trade crypto. The three most important tools you’ll encounter are spot trading, futures trading, and swaps.

Each has its own rules, risks, and best use cases. Let’s break them down.

Spot Trading​

Spot trading is the simplest form of trading. You buy or sell an asset and the transaction is settled immediately “on the spot.”

  • If you buy 1 ETH for $2,000, you now own that ETH.
  • If you sell it later for $2,200, your profit is $200.

Think of it like buying fruit at the market. You hand over money and walk away with apples in your bag. There’s no contract for the future, no debt, no leverage — just a straightforward exchange.

For beginners: Spot trading is usually the safest place to start. You can’t lose more than what you put in, and you always end up with the actual asset in your wallet.

Futures Trading​

Futures are contracts where you agree to buy or sell an asset later at a set price. In crypto, most exchanges offer perpetual futures, which don’t have an expiry date — you can keep the position open as long as you want, as long as your margin holds.

The key difference is leverage. With futures, you can control a bigger position than your actual money allows:

  • Example: You put in $100 with 10x leverage. Now you’re controlling $1,000 worth of Bitcoin.
  • If the price goes up 5%, you earn $50 (a 50% gain on your $100).
  • But if the price goes down 5%, you lose your entire $100.

Futures are like renting a racing car. You can go a lot faster, but one wrong turn and you crash. They are powerful tools for hedging or advanced trading, but they demand discipline and risk management.

Betting on Prices Going Down​

With futures, you’re not limited to betting on prices going up. Because it’s a contract, you can also “go short.” This means you profit if the asset loses value.

How does that work? Imagine you borrow an apple when it costs $2. You immediately sell it for $2. Later, the price of apples falls to $1. You buy one back for $1, return it to the person you borrowed from, and keep the $1 difference as profit.

In futures trading, this is exactly what happens:

  • You open a short contract and “sell” the asset you don’t actually own.
  • When closing, you “buy it back” — hopefully at a lower price.
  • The difference is your gain.

This makes futures powerful, but also risky. If instead the apple price goes up to $3, you still have to buy it back — and you lose money.

Swaps​

Swaps are a quick way to exchange one token for another without going through an order book. Instead, they usually rely on liquidity pools (in DeFi) or internal conversion engines (in CEXes).

  • Example: You swap 100 USDC for the equivalent in ETH. The system automatically finds the best rate and executes it instantly.

It’s like going to an airport currency exchange booth. You don’t negotiate the rate — you accept the posted one and get your new currency immediately.

Details newbies should know:

  • Swaps can be more expensive on CEXes and inside wallet apps due to hidden fees.
  • Some wallets don’t optimize across multiple pools, so you might get worse pricing.

This is why SUMEX provides its own built-in swap tool, which connects across chains and liquidity sources to give you optimized rates and lower commissions.

Which One Is Better?​

There’s no “best” option. Each tool is useful depending on your goals:

  • Spot is simple and safe for most beginners. This is the method used for accumulation of the assets you truly believe in long-term, sometimes even years. This is akin to buying company shares in hopes of the share price increasing over time.
  • Futures allow for hedging or higher-risk trading if you know what you’re doing. Also known as margin, or leveraged trading, or CFDs (Contract For Difference) - just like in Forex or stock / commodities markets. While the leverage can increase your profits, it also brings the same degree of risk of losing money.
  • Swaps are fast and convenient, especially when SUMEX optimizes them for you.

It comes down to your experience, time, risk appetite, and most importantly - purpuse. The good news is that we'll be looking into each one in more details too!

Conclusion​

Spot, futures, and swaps are the building blocks of crypto trading. If spot is like buying fruit at the market, futures are like racing with borrowed horsepower, and swaps are like exchanging currency at the airport.

Understanding the differences will help you choose the right tool for your situation. And with SUMEX, you don’t need to jump between apps — you’ll find spot, futures, and cross-chain swaps all in one place.

In the next tutorial, we’ll take a closer look at risk management — the key to staying in the game no matter which trading tool you use.