Spot trading is the most common type of trading on a crypto exchange, which involves buying and/or selling cryptocurrencies and making an immediate profit (or loss). The efficiency of spot trading is increased by exchange tools. Exchanges provide roughly the same opportunities for spot trading, but some nuances need to be taken into account.
After registering and opening an account on Zineеra, the user by default finds himself in the spot market, all trading settings in the trading terminals are the settings of the spot market. All orders in such a market are spot (or cash). The spot market is a market in which the settlement terms of trades between traders are such that property rights are instantaneous, which is the main distinguishing characteristic of spot trades. It is by the dynamics of spot prices that the situation that has developed in the market of an asset, for example, cryptocurrencies, is determined. Spot prices are the closest to reality and show key market trends. When buying a cryptocurrency solely for investment, the investor is also a participant in the spot market and enters into a spot transaction. A spot transaction is an obligation to buy or sell a cryptocurrency, which implies immediate delivery at the current market price, also called the spot rate. The benefits of spot trading include:
- Availability. Almost any user can start transactions at any time, and the fact that the settlement is carried out immediately makes them cheaper than entering into transactions on futures contracts;
- The volatility of crypto assets. This is exactly what provides an opportunity to earn for traders and investors;
- High liquidity, since the contract on the transaction, is executed immediately.
The disadvantages of spot trading are a continuation of its advantages, and these are losses in case of unsuccessful transactions and inaccurate calculations (cryptocurrency trading on the exchange). The risk increases significantly if trading is carried out with leverage. Volatility provides not only earnings but also losses. The spot market on a crypto exchange looks like a glass of stock, showing the activity of buyers and sellers. Buyers enter the market with their bid value, which is the maximum amount they can spend. Sellers enter the market with an offer price (ask), which is the minimum amount they are willing to sell their crypto assets for. In the DOM, you can see all these prices and start trading based on these indicators.
Spot trading strategies
Spot trading is exactly the type of trading that implies the possibility of applying various strategies using trading tools (lines, indicators, etc.). There are four main areas of cryptocurrency trading, in which, one way or another, any strategy is built-in (options for earning on cryptocurrency). The most common and simple method is to buy and hold. Actually, the trading process is limited only to the purchase of cryptocurrency, if possible, on favorable terms (but more importantly, the belief that the cryptocurrency will grow in the future). After the purchase, the holder does nothing, and stores cryptocurrencies in the wallet, sometimes even in a cold one, in the hope that they will rise in price. So far, this strategy has been quite workable as the price of cryptocurrency rises. Holder can simply forget about the cryptocurrency, or he can regularly check prices, including according to information on the crypto exchange. And, of course, you need to know not only how to buy cryptocurrency, but also how to sell at a good price and how to withdraw.
Before you start trading, you need to practice on demo modes, Zineеra provides a whole package of training services for these purposes. The exchange also provides a lot of instructions, and video tutorials – all can be used.