Crypto spot trading is the preferred trading approach for most new cryptocurrency traders. Especially new crypto traders prefer spot trading over margin or derivatives trading as it offers a simpler trading experience, and you actually own the digital assets you buy. This guide will teach you about spot trading in crypto and how it works. What is Spot Trading in Crypto? Spot trading in crypto is the process of buying and selling digital currencies and tokens at current market prices. Crypto spot trading provides traders with a way to trade and invest in digital assets. This is partner content sourced from Laura Shin’s Unchained and published by CoinDesk.

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The main difference between crypto spot trading and margin trading is that while you will need cash for spot trading, the latter allows you to borrow funds for your trades with the use of leverage. However, like any other investment or trading approach, there are still risks involved, and you could potentially lose all of your capital. Here are some of the key differences between crypto spot trading and margin trading. But that’s not all. Finally, it’s important to research the cryptocurrency you are buying and only trade what you can afford to lose. Spot crypto trading is an easy way to participate in cryptocurrency trading.

The simplest way to engage in spot trading is to use a centralized exchange (CEX) or a decentralized exchange (DEX) to place the trade. Spot trading allows you to buy cryptocurrencies, such as Bitcoin (BTC) and Ether (ETH), with your local currencies or trade across several cryptocurrency trading pairs. CEXs often come with a simpler experience than DEXs, which makes them appealing to beginners. To trade crypto on the spot market, choose an exchange and set up an account. For this example, we chose the centralized exchange, Luno.

More crypto options: Generally, there are more cryptocurrencies supported for spot trading than margin trading on cryptocurrency exchanges. Fees: Spot trading can involve various fees, including trading, withdrawal, and network fees for trading cryptocurrencies that can impact your overall profitability. Crypto Spot Trading vs. Margin Trading: What’s the Difference? Limited gains: Spot trading doesn’t offer leverage, which means you need to use your funds, which can limit potential gains (but also losses).