What is spot trading?

Spot trading is the buying and selling of a financial asset, such as a cryptocurrency or stock, for immediate delivery or settlement. In other words, spot trading involves buying or selling an asset at its current market price, rather than at a future price or with a delayed settlement date.

Spot trading is typically done on a cryptocurrency exchange, where buyers and sellers can trade cryptocurrencies in real-time at the current market price. This allows traders to take advantage of short-term price movements, and to quickly enter or exit a position based on market conditions.

In spot trading, the buyer and seller agree on the price of the asset, as well as the quantity being traded. The transaction is settled immediately, with the buyer receiving the asset and the seller receiving the payment.

Spot trading is different from derivatives trading, such as futures or options, which involve contracts that specify a future price and settlement date for the asset. Spot trading is also different from margin trading, which allows traders to borrow funds to increase their buying power and potentially increase their profits, but also comes with higher risk.

Overall, spot trading is a common and straightforward way to buy and sell cryptocurrencies and other assets in real-time, based on the current market price.

The article does not constitute financial advice.

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