Here’s an example. Let’s say that you want to buy USDT tokens and have BTC in your account. Settlement date – the date. You go – https://www.pipihosa.com/2023/11/22/trading-crypto-on-binance-becomes-challenging-as-order-book-liquidity-tanks-25/ – to the spot market and see that the BTC-USDT rate is around $20,000. So, you set up your market order or find one that’s already been placed and buy your desired amount of USDT that’s converted at the right price point. Time when the transaction is fully executed.

Thanks to the role that market makers play in maintaining the platforms’ order books, many exchanges reward then with reduced fees or, at a certain level, even grant rebates. Additionally, some exchange pairs, like BTC pairs on Binance, are free from additional fees. Some exchanges support peer-to-peer (P2P) trading. Instead of creating entries in the order books, traders place bids and select which payment methods they can accept, making it a flexible alternative to trading with an intermediary.

Leverage is a high-risk, high-reward game.

These transactions come with thresholds known as margin requirements. If you’re trading margin, you’ll notice things like x5, x10, or x100. This is done to maintain equity in a volatile market. Leverage is a high-risk, high-reward game. Once the requirement is reached, traders receive margin calls that require them to either sell their positions (whether in their entirety or partially) or put more assets that they already own into the account. If your trade goes well, the leverage can make it very profitable. These numbers measure how much your borrowed position can be increased. However, if things fall through, you might have to liquidate your assets to pay off the loan.

Derivatives traders are also able to use leveraged assets. So far, we’ve been discussing trading only on centralized exchanges, as that’s what concerns you the most if you’re interested in what is spot trading in crypto. However, this can also increase the risk of the trade. You’re not required to own the asset that you want to trade. Can rely on leveraged tokens instead. However, you’ve probably already noticed me mention DEXs – decentralized cryptocurrency exchanges. Some platforms offer trading simulators that allow customers to test futures or options strategies without putting their actual assets at risk. Therefore, it’s typically not recommended for beginners to dive into derivatives markets, and instead to figure out how the crypto spot trading works first.

It might take a few days for the transaction to process, but it’s otherwise considered one of the fastest possible trades. Learning what is spot crypto trading like is just one small part of the entire market ecosystem. Margin trading is a service offered by many crypto exchanges. As you delve deeper and explore centralized exchanges, as well as decentralized ones (DEXs), you’ll come across many other market systems and strategies. So, let’s take a look at some of them and see what other trade options there are aside from the spot markets. Now that we’ve answered the crucial “what is spot trading in crypto” question, let’s take a look at what other markets there are for traders.