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Spot trading
Spot trading is buying or selling an asset for immediate delivery at the current price, so the buyer gets the asset itself rather than a contract tied to its price. On a crypto exchange, a spot trade swaps one currency for another, such as dollars for a coin, without borrowing.
What it means for you. Bought on the spot market with your own money, the most you can lose is what you paid: there is no margin call and no forced liquidation. If the coin stays on the exchange, the exchange holds it for you; withdrawing it to your own wallet is a separate step that can carry a fee.
Sources: CFTC Glossary, Investor.gov: Stock Purchases and Sales: Long and Short · checked 4 October 2026
Margin trading
Margin trading is buying or selling with money borrowed from a broker or exchange, using the assets in your account as collateral. It makes a position larger than your own cash allows, which makes both gains and losses larger.
What it means for you. On margin you can lose more than you put in. If prices fall, you can be asked to deposit more on short notice, and the firm can sell your holdings without asking you first, choosing what to sell. Interest on the loan runs the whole time and reduces any return.
Sources: SEC Investor Bulletin: Understanding Margin Accounts, CFTC Glossary, Cheng, Deng, Wang and Yu: Liquidation, Leverage and Optimal Margin in Bitcoin Futures Markets (arXiv) · checked 4 October 2026