Lesson 11 of 14 · 2 min
How crypto trading works
Spot vs perpetual futures, funding rates, 24/7 markets, and the risks that are unique to crypto venues.
Crypto trades around the clock, and most retail activity happens on exchanges rather than on one central market.
Spot vs derivatives
- Spot — you buy the actual coin. No expiry; you can lose what you put in, but not more.
- Perpetual futures ("perps") — futures with no expiry. A funding rate paid between longs and shorts keeps the price close to spot. Often offered with very high leverage.
- Dated futures — regulated crypto futures also trade on CME (bitcoin and ether, including micro contracts).
What's different about crypto
- 24/7 — no close, so risk never sleeps; big moves often happen on weekends.
- Fragmented — prices and volume are spread across many exchanges, so volume tools see only part of the picture.
- Liquidations — with high leverage, positions are force-closed quickly, which can cascade into sharp moves.
Venue and custody risk
When you trade on an exchange, it holds your funds. Exchanges have failed and frozen withdrawals before. Regulation differs by country, and some offshore venues aren't available — or legal to use — where you live.
Where it fits
The principles in this library — auctions, value, orderflow, risk — still apply. Utopia's course material focuses on index futures because of their centralised, transparent data.
Quick recap
- Spot = own the coin; perps = leveraged contracts with funding, no expiry.
- 24/7 markets and fragmented data change how you read them.
- Exchange and regulatory risk are real — check before depositing.
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