Spot trading means buying or selling an asset itself at today's price. Forex trading means exchanging one currency for another, always quoted in pairs, and futures trading means buying or selling a standardized contract to trade an asset at an agreed price on a future date. All three let you trade price changes, but they differ in what you hold, how leverage works, whether positions expire and what it costs to stay in a trade.
These differences matter even when the charts look the same: Bitcoin's spot and perpetual futures charts are nearly identical, yet going short, using leverage and holding overnight work very differently in each.
This guide explains each market, compares them side by side, and ends with how spot and futures accounts work on Drift Fund.
Spot trading: the asset itself
In a spot market, you exchange money for the asset at the current price, and the trade settles immediately or within a short, fixed period. If you buy 0.1 BTC on a crypto spot market, you pay its full value and the coins are yours.
- No expiry. You can hold the asset for as long as you like.
- No leverage by default. A $6,500 purchase needs $6,500.
- Long by nature. You profit if the price rises. Profiting from a fall means borrowing the asset to sell it, which plain spot accounts usually don't allow.
- Simple costs. You pay the spread and usually a trading fee, but nothing to keep holding.
Without leverage, your loss is limited to what you paid, because a price cannot fall below zero.
Forex: currencies traded in pairs
The foreign exchange (forex) market is over the counter (OTC): there is no single central exchange. Prices form across a global network of banks, dealers and brokers, which is why quotes can differ slightly between providers.
Base and quote currency
Currencies are quoted in pairs because a currency trade always swaps one currency for another. In EUR/USD, the euro is the base currency and the US dollar is the quote currency. A price of 1.0850 means one euro costs 1.0850 US dollars.
- Buying EUR/USD means buying euros and selling dollars; you gain if the euro strengthens.
- Selling EUR/USD means selling euros and buying dollars; you gain if the euro weakens.
Because every forex trade is both a purchase and a sale, going short is as natural as going long. Price changes are measured in pips: 0.0001 for most pairs and 0.01 for pairs that include the Japanese yen.
Rollover and swap
Retail forex positions are usually leveraged and have no expiry date. Positions held past the daily rollover time are typically charged or credited a swap, also called rollover or overnight financing, based mainly on the interest rate difference between the two currencies.
Futures: standardized contracts with an expiry
A futures contract is an agreement to buy or sell a set amount of an asset at a price agreed today, for settlement on a specific future date. Traditional futures trade on exchanges and are standardized: the exchange fixes each contract's size, minimum price step and expiry date.
- Expiry. Dated contracts expire. To stay in a position, traders roll it by closing the expiring contract and opening the next one.
- Margin. You post an initial margin deposit rather than the full contract value, and must keep your account above a maintenance margin level.
- Daily settlement. Gains and losses are usually settled every day, so a losing position can require extra margin.
- Long or short. Selling a contract is as simple as buying one.
Most futures traders never take delivery of the underlying asset; they close or roll before expiry.
Crypto perpetual futures
Crypto markets popularized the perpetual future, a futures contract with no expiry date. With no expiry to pull its price toward the spot price, a perpetual uses funding payments: at regular intervals, often every eight hours, one side pays the other.
- When the perpetual trades above the spot price, funding is usually positive and longs pay shorts.
- When it trades below the spot price, funding is usually negative and shorts pay longs.
For example, at a funding rate of 0.01% per eight-hour interval, a long position worth $65,000 pays $65,000 × 0.0001 = $6.50 per interval, or $19.50 over a day of three intervals. Rates change constantly and can turn negative, in which case longs receive funding.
Leverage and margin
Leverage lets you control a position larger than the money you set aside for it. Margin is that set-aside amount. At 100× leverage (also written 100:1), the margin is 1% of the position's value; at 10×, it is 10%.
Margin required = position value ÷ leverage
Leverage changes how much margin a trade ties up, not how much each price move is worth; that depends only on position size. What leverage does is let you open far larger positions than your cash allows, magnifying gains and losses relative to your account. The guide to pips, lots and leverage covers this in detail.
Worked example: the same move, with and without leverage
For example, say Bitcoin is at $65,000 and you buy 0.1 BTC.
- Spot, no leverage: you pay 0.1 × $65,000 = $6,500.
- Futures at 10×: the margin is $6,500 ÷ 10 = $650.
The price rises to $67,000. Both positions gain 0.1 × $2,000 = $200. On spot, that is $200 ÷ $6,500 ≈ 3.1% of the money used. On futures, it is $200 ÷ $650 ≈ 30.8% of the margin.
If the price had fallen to $63,000 instead, both would lose $200, which is 30.8% of the futures margin. A leveraged position can also be closed out automatically when losses use up its margin, which cannot happen to an unleveraged spot purchase.
The same logic applies in forex. One mini lot (10,000 euros) of EUR/USD at 1.0850 is worth 10,000 × 1.0850 = $10,850, so at 100:1 the margin is $10,850 ÷ 100 = $108.50. If EUR/USD rises to 1.0880, the gain is 10,000 × 0.0030 = $30, the same at any leverage.
Going long or short, and what it costs
In forex and futures, including crypto perpetuals, you go long or short simply by buying or selling, and both directions are standard. On a plain spot market you can only sell what you hold, so shorting requires borrowing the asset, which many spot accounts don't offer.
Costs differ too:
- Spread: the gap between the buy and sell price applies everywhere; see bid, ask and spread.
- Commission or trading fee: common on crypto spot and on futures, and charged on some forex accounts.
- Holding cost: swap on leveraged forex, funding on perpetuals, and the cost of rolling dated futures into the next contract. Unleveraged spot has none.
Spot vs forex vs futures at a glance
| Feature | Spot | Forex | Futures |
|---|---|---|---|
| What you trade | The asset itself | One currency against another | A standardized contract |
| Where it trades | Exchanges and dealers | Over the counter (OTC) | Exchanges |
| Expiry | None | None; positions roll daily | Fixed date; crypto perpetuals have none |
| Leverage | Usually none | Common | Built in through margin |
| Short selling | Usually not on plain spot | Standard | Standard |
| Holding cost | None | Swap | Roll cost or funding |
How this works on Drift Fund
Every Drift Fund account, challenge or funded, is a simulated account that uses live market prices. Nothing is bought or sold on an exchange, and you never own or hold the underlying coins, currencies or metals. The labels Spot and Futures describe how each account type behaves in that simulation.
- Spot accounts trade crypto at spot prices with no leverage (1×), long only (no short selling) and no margin.
- Futures accounts allow long and short positions with leverage up to 100×. They cover crypto, priced from perpetual futures markets, plus major forex pairs, gold and silver.
- There is no funding, swap, overnight or interest charge on any Drift Fund account, including crypto positions priced from perpetual futures.
- Trading runs on a web trading platform, and MetaTrader 5 (MT5) is available for futures accounts.
Drift Fund offers evaluation challenges and Instant Funded accounts, with account sizes from $10,000 to $300,000. The guide on what a funded trading account is explains the model in general, and the rules page has the full account details.
Common mistakes
- Treating leverage as extra profit. Fix: size every position from the amount you are willing to lose, then check the margin it needs.
- Ignoring holding costs. Fix: look up the swap or funding rate before keeping a leveraged trade open overnight or for days.
- Forgetting that dated futures expire. Fix: note the expiry and roll dates of any contract before you trade it.
- Assuming spot and futures prices are identical. Fix: compare them; futures and perpetuals can trade above or below spot.
Key takeaways
- Spot means trading the asset itself at today's price, with no expiry and usually no leverage.
- Forex is an OTC market where currencies trade in pairs, quoted as base currency against quote currency.
- Futures are standardized contracts with margin and an expiry date; crypto perpetuals have no expiry and use funding payments.
- Leverage changes the margin a trade needs, not the value of each price move.
- Holding costs differ: swap for forex, funding for perpetuals, roll cost for dated futures.
- Every Drift Fund account is simulated at live prices, with Spot and Futures account types and no funding, swap, overnight or interest charge.
Frequently asked questions
Is forex trading spot or futures?
Most retail forex is traded as spot-style OTC positions with no expiry that roll over each day. Currency futures also exist on exchanges, with standardized contract sizes and fixed expiry dates.
What is the difference between crypto spot and perpetual futures?
On a spot market you buy the coin itself, pay its full value and usually profit only from a rise. A perpetual future is a contract that tracks the coin's price with no expiry, lets you go long or short with leverage, and involves periodic funding payments between longs and shorts.
Is futures trading riskier than spot trading?
The main risk is leverage, not the product. A leveraged futures position can lose a large share of its margin on a small move, while an unleveraged spot purchase loses only in proportion to the price fall. Sizing positions from a planned loss, rather than from available leverage, keeps the risk comparable.