Crypto Spot vs Futures Trading

Owning underlying crypto spot assets means you hold the actual coin with zero liquidation risk from leverage, though you lack short-selling capabilities unless using external margin. Conversely, leveraged perpetual contracts allow you to short easily and amplify returns, but they introduce liquidation risks and periodic funding rates that can slowly erode positions if held too long.

When trading perpetuals with a prop firm, managing risk against daily loss limits and consistency rules becomes critical due to high volatility and leverage. Funding fees can also eat into your drawdown buffer if not monitored closely.

How do you balance funding rates and risk management in your crypto setups? Share your thoughts below!