Meaning of spot trading
A spot trading is actually a spot transaction. Mostly the spot trading depends on currency commodity or instrument. Foreign exchange spot trade is popular because it traded electronically in the whole world
Key points:
- Spot trading of crypto currencies is the immediate trading
- This process includes digital wallets, order placement with profit and loss of market violability
- It has many opportunity profiles and it is difficult to understand for spot trader.
Types of Crypto Spot Market
Primarily it involves two types;
Crypto exchanges:
In this trading both the buyer and seller make possible transaction at market places.
Over the counter trading:
OTC trading is transaction between two parties without involvement of exchange greater discussion on price and quantity.
For example; if you think the price of gold is going to increase you will buy the spot gold then sale on increased price you would make profit if it is decrease you would make lose.
Spot trading is only the method you can get submission to financial market. If you want long term concern you could think about other trading options.
Simplicity of crypto spot trading
In this trading spot orders do not include difficult wallets platforms or tools. Its simplicity means product is buying at low price for other great categories like HODling and DCAing
HODling is process of contain crypto currencies for long-term hoping in the increase value but it is not guaranteed in some cases. In this case you can effectively use another category Dollar Cost averaging which involves buying crypt currency for any value it does not matter what the current spot price.
Spot trading vs. other trading categories
There are many other categories of trading except spot trading like financial markets, including future trading but these trading’s speculating with profit and loses but spot trading has beneficial performances as you are involved in currently spot prices in market.
Is it short term trading?
It is simple as it is beneficial for opening and closing short term positions with no expiry date. Product is delivered in immediately base. So buying and selling depends on the traders they own to trade.
They can receive cash payment by selling the assets or with fiat. This centralized exchanging is short term and benefited for trading.
The decentralized exchanging is long term. In this exchange both the parties exchange through block chain technology and it is time taken and payment of trading become lowers in the financial markets.
Spot trading in crypto
The simple way that involve in spit trading is centralized or a decentralized exchange.
Choose a crypto currency exchange
Spot trading permit you to buy crypto currencies like Bit coin and Ether with your spot currencies to trade across other crypto currencies trading pair.
Create an account
Trading in crypto you have to select an exchange to make an account. For this purpose you have to select the centralized exchange.
Place order
You have to select your fiat currency from any other wallet and select currency pair to trade and you can buy and sell at market price.
Execute the trade
If your order is selected you will receive the crypto currency in your selected exchange wallet. Enter the amount you want to trade and then click buy. Your order will be received as soon as you as it identical to the sell order and you will receive you BTC in your exchange account.
Benefits of spot trading
The main benefit if this trading is that it is very simple and clear form of earning profit this because in this trading price is fixed according to market spot price. This is speculating and most fast possession of the underlying asset which is valid to transfer the tokens of any wallet exchange.
Loss of spot trading
Like its benefits there is some disadvantage is that the asset price can be decrease and change to certain subject. So traders must be careful to manage the market fluctuations for trading in this way even to face the potential loss in price.
Avoid mistakes when spot trading
- Don’t focus to your timeframes
- Fast trading
- Avoid loss and take profit orders
Two terms to know to spot trading
Trade date: It should mark the date and time when your transection started.
Settlement date: This date can be different from trade date because due to network congestion it can take time of processing.
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