Crypto Spot Trading is the rawest form of trading cryptocurrency.
In this Crypto Spot Trading 101, you’ll get a full overview of all the elements of spot trading crypto, so you can maximize your potential.
Key points on spot trading
- Spot trading is the process of trading actual cryptocurrencies.
- Spot trading is not leveraged, and is therefore less volatile than futures or margin trading.
- Spot trading lets you withdraw the cryptocurrencies that you’ve traded.
Let’s start with a simple explanation of exactly what spot is. That way we can build on the whole ‘spot trading’ stuff from a point of understanding.
What is ‘spot’
Spot is a type of ‘contract’ that settles immediately. In the crypto-world, spot markets are used to trade actual cryptocurrencies or tokens. So, if you wanted to trade BTC or ETH, with immediate settlement, you’d use a spot market.
Now that you understand what Spot is, lets explore what spot trading is, and why you should (or might want to) use it.
What is spot trading
Spot trading is the act of trading actual assets. There are no ‘contracts’ or a ‘leveraged’ elements to it.
Why use spot trading
For the most part, people use spot trading because they want to buy the actual asset. However, it’s also good for trading because there aren’t any leveraged products. Which, in crypto, is a life saver for newbies.
Should you trade spot or futures?
This is entirely up to you. But generally, futures trading is for traders with significant experience and knowledge. Many of the futures markets that are available are plagued by bots in crypto. Which, makes it harder to read things like Market Depth and ultimately makes orderbook trading horrendous. On the other hand, you can trade spot and not get enough volatility, so each market has it’s own pitfalls.
In a nutshell:
- Spot if you’re a beginner or you want the real thing.
- Futures if you’re a professional looking to day-trade, etc.
What are the best crypto exchanges for spot trading?
All of the large exchanges support spot trading. However, you can also spot trade on most decentralized exchanges. In fact, it’s more common to find spot trading opportunities in defi than leverage trading.