Spot Trading Definition
Spot trading means buying or selling an asset for immediate settlement at the current market price. When you buy Bitcoin on a spot exchange, you own Bitcoin. It is in your account. You paid real money and received a real asset.
"Spot" refers to the price right now, at this moment, as opposed to a futures price which is an agreement to buy or sell at a future date. In crypto, spot trading on exchanges like Bybit or Binance is the most straightforward form of market participation.
Plain language definition
Spot trading: you pay USDT, you receive a cryptocurrency. You own the crypto. If it goes up, you profit when you sell. If it goes down, you lose only what you paid. You can never lose more than your investment.
Spot vs Futures
Futures are contracts to buy or sell an asset at a predetermined price on a future date. In crypto, most retail "futures" trading is actually perpetual contracts: they never expire but simulate futures pricing with a funding rate mechanism.
| Attribute | Spot | Futures / Perpetuals |
|---|---|---|
| Ownership | You own the asset | You hold a contract, not the asset |
| Leverage | None (1x) | Up to 100x |
| Max loss | Amount invested | Entire margin (and more, if liquidated) |
| Funding costs | None | Periodic funding payments to counterparty |
| Expiry | Indefinite (hold as long as you like) | Perpetuals: no expiry but funding; Dated: expires at settlement |
| Complexity | Simple: buy low, sell high | Complex: margin, liquidation, funding rates, longs vs shorts |
| Responsible alignment | No interest charges, full asset ownership | Interest-based funding costs, no direct asset ownership |
Spot vs Leverage
Leverage means borrowing capital to trade a larger position than your actual balance. If you have $1,000 and use 10x leverage, you are trading a $10,000 position. This magnifies both gains and losses.
Spot (no leverage): 10% price move
10x Leverage: 10% price move
Why QARI Chose Spot Only
The choice to build QARI as a spot-only platform is intentional and architectural. It is not a feature that can be turned on or off.
No liquidation risk
A spot position can only lose what was invested. There is no margin call, no liquidation cascade, and no scenario where you lose more than you put in.
No funding costs
Futures perpetuals charge funding rates that can erode positions over time, especially when holding against the funding direction. Spot positions have no ongoing holding cost.
Responsible by design
Spot trading carries no interest charges, no funding rates, and no borrowed capital. This makes it the only trading mode compatible with responsible-trading principles. It is why QARI chose spot as an architectural constraint.
Simplicity and transparency
Spot trading is simpler to audit, understand, and explain. Users can verify every trade directly on their exchange. No complex derivative mechanics are involved.
Risk management is cleaner
Position sizing, stop-loss calculations, and risk-to-reward ratios are straightforward in spot. There are no funding adjustments or basis risk to account for.
Practical Implications for You
As a QARI user, the spot-only approach has specific practical effects.
- Your maximum loss on any trade is exactly what the stop-loss calculation says. If QARI risks $100 on a trade with a 15% stop, you lose at most $100 (plus a small amount of slippage in extreme cases).
- You actually own the cryptocurrency during a trade. Your Bybit wallet will show the crypto asset while the position is open.
- QARI only goes long (buys). It does not short-sell. This is a deliberate constraint consistent with the responsible-trading architecture.
- You do not pay ongoing holding fees or funding rates. Position holds cost nothing beyond your exchange's standard trading fees.
- If the exchange goes down temporarily, your assets are not at risk of liquidation. They simply sit in your account until the exchange comes back online.