Why the Choice of Trading Products Matters
Selection is Key
There is not only one market for an asset like Bitcoin, but hundreds of them. There is spot markets and derivatives like Perpetual Futures. You can also use decentralized swap protocols or even decentralized derivatives, with the choice of doing it on different blockchain networks.
For traditional markets, let’s say the german stock index Dax40, you can choose to trade the stocks individually on XETRA, or choose an option or future on the EUREX. There is also CFD’s, emitted by dozens of brokers and there are Knockout Certificates and ETFs tracking the index.
Which product and market — for the same asset — should I choose then?
Well, it’s kind of simple. If you would have two Bitcoin ATMs next to each other and you read the fine print of each machine. One says the Bid and Ask spread is 100, and the other one says it’s 60, you would go for the latter.
It’s not that obvious mostly, as slippage (the difference for execution vs desired price), roundturn comissions and overnight holding costs might be added to this comparison. You can calculate those costs into points by converting them in point-values (simple rule of three), to get a good comparison like the simple one above.
