Bybit Funding vs. Derivatives vs. Unified Trading Account: Multi-Asset Trading Under One Account

Bybit, a leading cryptocurrency exchange, has revolutionized the crypto trading space with its innovative and user-friendly platform. With its diversified trading accounts, users have the opportunity to trade various digital assets, such as spot and derivatives, all under one roof. Whether you're a battle-hardened crypto veteran or just cutting your teeth in crypto trading, Bybit Spot, Derivatives and Unified Trading accounts have something for everyone. In this article, we'll dive into the details of these trading accounts and what makes each one different.

How Does the Bybit Funding Account Work?

With a Bybit Funding account, users can buy cryptocurrencies at the market or spot price and hold them in their account balance, hoping their values appreciate. 

To start trading on Bybit Spot, first register and deposit money to fund the account. Bybit conveniently supports a range of deposit methods, including transferring crypto from your wallet and purchasing with fiat currency (credit/debit card, fiat deposit or P2P trading). With the account funded, you can access the spot trading pairs and place orders to buy or sell digital assets. 

Bybit uses a secure and transparent order-matching system to execute trades and provides real-time market data to help users make informed trading decisions.

Order types to consider when using a Bybit Funding account include:

• Market Order: Instant buying and selling at the best available price.
• Limit Order: Buy order placed when the seller agrees to sell the asset at a predetermined price to the buyer.
• Conditional Order: A market order filled when the trigger price meets the last traded price.

The spot market displays the order history, letting you view all executed orders, including filled and canceled ones.

When trading Bybit Spot, there's a fee for each order, depending on whether the user is a maker or taker. Makers provide liquidity to the market by adding to the order book, while takers remove liquidity from the market by filling an order. Takers pay a 0.1% fee on each order, while makers earn a 0.1% rebate.

A simple example of Bybit Spot account trading is as follows:

Imagine you're Buyer A, holding 2,000 USDT, and you're eager to own some BTC currently priced at $20,000. You decide to place a buy order with a maximum limit of an equivalent amount of BTC. Suddenly, you find a match with Seller B, who's offering BTC in exchange for USDT at your desired price. The deal is struck, and the trade is executed in an instant. Do note that you'll need to consider the trading fee, Buyer A do not necessarily own 0.1 BTC, and Seller B won't be receiving 2,000 USDT as well after incurring the trading fees.

How Does the Bybit Derivatives Account Work?

Bybit offers derivatives trading, which allows traders to agree to trade underlying assets at a specific future date and price with the primary objective of profiting by speculating on the underlying asset's future price. The Bybit Derivatives account allows traders to trade multicurrency, Spot, Spot Margin, USDT and USDC Perpetual, and USDC Options in a single account.

Trading products grouped under Bybit Derivatives include:

1. Copy Trading: This allows you to copy the trades of successful traders, so you can benefit from their expertise and earn profits.
2. Grid Bot: This automated trading tool helps you automatically execute trades based on predefined rules and conditions.

3. Futures Contracts: These allow you to purchase or sell an underlying asset at a specified future price. Bybit offers both Perpetual and quarterly Futures contracts for various cryptocurrencies.

4. Options: Contracts that give you the right (but not the obligation) to buy or sell an underlying asset at a set price. Bybit offers Options contracts for selected cryptocurrencies.

To start trading derivatives with Bybit, first open and fund your account with either fiat currency or crypto. As a beginner, consider starting with a low-margin rate and focusing on the derivatives you’re interested in trading. It will also help you to understand the mechanics of margin trading. 

Lastly, purchase futures contracts by depositing a margin. Hold the contracts until the maturity date, and then close the position to realize profits or losses.

How Are Derivatives Trading Different From Spot Trading?

Derivatives and spot trading differ in a few significant ways. In spot trading, you trade assets at the current market prices and settle the trades within two business days. On the other hand, derivatives trading involves entering into a contract without owning the underlying asset. This can be a futures contract, options contract or perpetual swap, and its value is derived from the price movements of an underlying asset such as Bitcoin.

Furthermore, spot trading allows you to purchase or exchange an asset at its current market price. In contrast, in derivatives trading, you and the seller agree to trade the asset at a predetermined price in the future. As the underlying asset's price fluctuates, either party can profit from the agreed-upon contract.

Finally, as mentioned, the settlement period for spot trading is immediate, while derivatives trading involves settling at a specific time in the future. In most cases, crypto derivatives are settled by exchanging cryptocurrency or cash upon the expiration date, which brings liquidity into the market.

Funding Account vs. Derivatives vs. Unified Trading Account

Bybit’s Funding account (previously known as a Spot account), derivatives and other trading products offered by Bybit offer optimized trading solutions to hundreds of users. But what if you could manage all your trading needs under one account, rather than opening several accounts for various products? The newly launched Bybit Unified Trading Account (UTA) enables you to do just that — and more.

By consolidating your assets and allowing you to trade spot, leverage, USDC and USDT perpetuals and USDC options in one single account, Bybit's Unified Trading Account eliminates the hassles of juggling multiple accounts, streamlining your trading experience.

Note: Bybit Spot account has been merged into the Funding account from March 2023 onward. Users who have upgraded their account to the UTA can access the Funding account, Inverse Derivatives account and Earn account. 

Before vs. After Upgrading to UTA

You’ll enjoy the following benefits after upgrading to Bybit's Unified Trading Account:

• Risk Management: Say goodbye to amplifying risks caused by single losses. With UTA, the margin is calculated at the account level, balancing out your trading profits and losses. This allows you to diversify your portfolio and apply effective risk management strategies.
• Trading Strategies: With UTA, you have the flexibility to execute various trading strategies, allowing you to seize opportunities in any market condition.
• Portfolio Margin: Take advantage of your Portfolio Margin and optimize your margin usage. Bybit's UTA allows you to pool margin across multiple positions, increasing your buying power and maximizing returns.

The Bottom Line

Overall, Bybit's Funding, Derivatives and Unified Trading Accounts have given traders the flexibility and convenience of trading different digital assets using Bybit Spot, Derivatives, and other trading products on a single platform. Even better, the Bybit UTA combines the various trading products into a single account. Upgrading to UTA offers traders flexibility of multi-asset collateral, greater capital efficiency and a simplified trading experience.

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