The A-Z of spot trading in cryptocurrency

spot trading crypto

Trading is no cakewalk, especially when it comes to a wildly volatile industry like cryptocurrency. However, if you are a new investor or trader, you would like to start with a comparatively easily comprehensible method. In that light, crypto spot trading could be your Holy Grail. However, it’s not just the amateurs – some veteran traders too are inclined to spot trading crypto. The best part about spot trading crypto is that it’s a breeze to understand, gets executed fast, and assures a transparent method.

You can opt for spot trading crypto for long-term trading. However, spot traders mostly focus on short-term, quick, and frequent profits with spot trading crypto. If you are interested in signing up for spot trading in the crypto industry, the post below I’ll serve as the blueprint for all that you need to know about spot trading crypto.

Spot trading- what does it actually cover?

Well, the concept of spot trading refers to the process of on-the-spot trading.

In spot trading crypto, a crypto asset is sold and purchased at the immediate live prices. As the entire transaction is settled on-the-spot only, the trade is being officially dubbed as spot trading. The trading process is extremely popular in the traditional trading markets like stock markets and spot trading is getting quite a good rap in the crypto scene as well.

It must be mentioned here that in spot trading crypto, the payment is always made upfront. However, generally it takes the buyer around 3 days (trade day and 2 additional days) to receive the purchased asset. But a great thing about the crypto market is that it is open round-the-clock. As a result, transactions happen much faster than they usually happen in traditional trading markets. With spot trading crypto, the buyer usually gets the asset within the same working day.

You can execute spot trading crypto with both crypto and fiat.

Difference with forward and margin

New traders must gather a basic understanding about the different types of trading in the crypto scene and their difference with spot trading crypto. Here, we will focus on two most important trading types in the crypto scene other than spot trading.

Forward trading is the exact opposite of spot trading crypto. We have already discussed that in spot trading, trading is executed based on current market price and payment is also settled upfront. But, in forward trading, the trading price is settled for a future price. The trading parties make a speculation about the possible price of a crypto asset in the near future and confirm the trade based on that.

In margin trading, traders trade with more or additional capital. The capital or leverage for the trade is provided by a trading exchange or broker. Like spot trading crypto, margin trading too happens based on prevalent. But the key difference is the capital you provide in spot trading comes absolutely from your pocket. In margin trading, you not only deposit from your pocket but also add a lot more by borrowing from your trading platform.

Best bits about spot trading

If you need more inspiration to decide whether you should go for spot trading crypto, here is a discussion on the best benefits of spot trading in the crypto industry.

Straightforward process

If you think trading is too complicated for you, you can try out spot trading crypto. It’s a fairly straightforward process and hence always easier to grasp. As a result, spot trading crypto is usually recommended for beginner traders who need a simple process to start with.

No speculation needed

There is no need to speculate the prices as the entire trade will happen based on on-the-spot prices.

Speculation is certainly an interesting concept – in fact, it’s somewhat the foundation of forward trading. But, when you are an amateur in the market, you are yet to gather experience and understanding to come up with a fair and intelligent speculation about crypto asset prices.

Ability to negotiate

This is certainly one of the best advantages of spot trading crypto.

In spot trading crypto, you can always bargain and negotiate the prices as per your specifications and needs. Both sellers and buyers in the trade hold the power to negotiate during the trade.

Fast trade

Spot trading happens right on-the-spot and hence the entire process gets completed extremely fast.

Transparent process

This is another benefit why a major share of traders prefers spot trading crypto.

Spot trading involves on-the-spot dealings and that makes the entire process transparent for both parties.

Less headache

In contrast to margin trading, spot trading crypto always involves less headache.

There is no denying of the fact that spot trading crypto can’t garner the astronomical profits you are likely to attain with margin trading.  But you also can’t forget that margin trading involves the risk of equally high losses. On top of that, you have to  maintain a margin to prevent liquidity and pay back the interest for borrowed funds.

You don’t have such issues with spot trading crypto.

Platforms for spot trading in crypto industry

There are multiple platforms where you can execute spot trading crypto.

Crypto exchanges

Crypto exchanges are certainly the most preferred platform for spot trading among the traders. In regard to exchanges, you have two options to choose from. One is Centralized exchanges. CEXs generally assure higher processing speed and security from imposters but they charge high fees. Also, CEX will have full control on the custody of your funds. On the other hand, Decentralized exchanges offer a more relaxed and free environment – they don’t want custody of funds and also assure less fees.

OTC platforms

OTC platforms follow a lesser rigid framework compared to crypto exchanges for spot trading crypto. These platforms also assure comparatively faster processing of trade in comparison to exchanges.

P2P platforms

The P2P platforms allow spot trading crypto directly between a seller and buyer.

No matter whichever spot trading platform you choose, make sure it has been operating in the industry for at least 5 years, backed by stellar reputation. Moreover, your chosen trading platform should also allow you to choose from a wide range of pairs. Don’t forget to check the security measures taken by the trading platform.


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