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Crypto spot: understanding spot trading and its differences from other methods
Spot trading , also known as cash trading , is the simplest and most direct method for buying and selling an asset . If you are new to the world of cryptocurrencies , this guide explains what spot trading , why it's called that, how it works, and how it differs from other forms of trading such as margin trading or futures contracts .
Table of Contents
What is spot in crypto?
The term "spot" refers to the cash market , that is, the place where traders buy and sell digital assets at the current market price , also called the spot price . The transaction is immediate: as soon as you place a buy or sell order, the asset changes ownership instantly, and you can withdraw it to your wallet or keep it on the platform .
Spot trading is therefore the most direct form of cryptocurrency trading : there is no leverage , no derivatives, and no debt. You buy cryptocurrencies to actually own them, or you sell assets you already hold.
Why is it called a "spot"?
The word "spot" comes from the English "on the spot," meaning "immediately" or "right away." In a spot market , the transaction takes place instantly, at the market price at the moment the order is executed. Unlike other types of trading where the delivery of the asset may be deferred or subject to contracts, here everything is immediate. This simplicity makes spot trading ideal for beginners.
How does spot trading work?
Spot trading involves buying or selling cryptocurrency directly on an exchange platform 's how it works :
- You create an account on a platform
- You deposit funds (euros, dollars, or other cryptocurrencies ).
- You place a buy or sell order on the spot market .
- The transaction is executed at the current market price (the spot price ).
- The assets are immediately available in your account or wallet .
In spot cryptocurrency trading , there is no concept of debt or margin: what you buy truly belongs to you, and what you sell must already be in your possession. Traders use this trading method to profit from market price fluctuations and realize potential gains based on these price movements .
Where can I buy cryptocurrency on the spot market?
You can buy Bitcoin and other cryptocurrencies with OKX.
OKX offers:
- Strict regulatory compliance, OKX being one of the first platforms to have held the European license ( MiCA ). It is on the AMF whitelist.
- A dual interface: a simplified application for beginners and an advanced platform offering tiered pricing based on volume.
- Competitive fees on the market: 1% on the simplified platform and a maximum of 0.35% on the advanced platform .
- Access to several hundred cryptocurrencies to potentially diversify your portfolio in addition to Bitcoin.
- Additional services such as staking to generate returns on these cryptocurrencies.
OKX has one of the most comprehensive offerings on the market. We are not affiliated with them, but we use their referral link.
More information about the rewards can be found here.
The advantages of spot trading
- Simplicity: ideal for beginners who want to understand trading without complexity.
- Actual ownership of digital assets .
- No risk related to leverage or forced liquidation.
- Transparency on spot transactions and fees.
- An attractive option for beginners who want to invest for the long term.
The limitations of spot trading
- No leverage to increase exposure (unlike margin trading ).
Cash trading vs. other types of crypto trading
To fully understand spot trading , it's helpful to compare this method to other trading options available on cryptocurrency platforms . Here are the main differences between spot trading , margin trading , and futures trading .
Spot trading vs margin trading
- Spot trading : you buy and sell assets that you actually own, without borrowing funds.
- Margin trading : you can borrow money from the platform to increase your exposure through leverage (e.g., 2x, 5x, 10x). This allows you to multiply potential gains , but also potential losses.
- Leveraged trading involves additional risks: if the market moves against you, you can be liquidated and lose all or part of your invested capital.
- Unlike spot trading , margin trading requires rigorous risk management.
Margin trading is often very limited in France.
Spot trading vs. futures contracts
- Spot trading involves the purchase and sale of digital assets at the spot price .
- Futures contracts are agreements to buy or sell an asset at a future date, at a price fixed in advance. You do not own the underlying asset
- Traders can use high leverage on futures, which increases the volatility of the results.
- Futures trading is more complex and exposes one to risks of liquidation or rapid losses in the event of strong market fluctuations
Spot trading vs. options and derivatives
- Spot trading is based on the actual ownership of cryptocurrencies .
- Options and other derivative products are complex financial instruments that allow speculation on fluctuations without owning the asset itself.
- These products are reserved for experienced traders due to the associated risks.
Why choose spot trading to start with crypto?
Spot trading is an attractive option for beginners because it allows them to understand trading without having to deal with the complexities of derivatives or leverage . Here's why:
- You can buy cryptocurrencies and keep them for as long as you want.
- You control your assets: you can transfer them to an external portfolio
- You limit the risks associated with leveraged trading .
- You benefit from transparency regarding fees and market price .
- Ideal for a investment , without liquidation pressure.
How does spot trading work on the main platforms?
Most cryptocurrency platforms offer a spot market accessible to everyone. Here are the typical steps :
- Create an account on the platform of your choice.
- Deposit funds in fiat currency (euro, dollar) or in cryptocurrencies .
- Access the cash or spot .
- Buy and sell assets at the current market price or by placing a limit order.
- Manage your digital assets from your account or transfer them to an wallet .
Spot transactions are generally subject to low fees, clearly indicated before each transaction.
The free guide will walk you through your first steps, from buying your first cryptocurrencies to creating a software wallet and making a transaction on the blockchain. It is available by filling out the form below.
To gain a deeper understanding of how the monetary system and Bitcoin work, and to develop a more complete mastery of the tools, finance and legal constraints (taxation, inheritance, etc.) , we invite you to discover the BSM program .
It includes detailed video tutorials on centralized exchanges, software wallets, hardware wallets, and best practices. The program can be accessed from the header or the link above.
Summary: Crypto spot vs. other types of exchanges
- Spot : buying and selling assets at market price , actual ownership, no leverage .
- Margin trading : borrowing funds to increase exposure, leverage , liquidation risk.
- Futures contracts : speculation on the future price, no ownership of the asset , leverage possible, increased complexity.
- Options and derivatives: complex instruments for speculating on fluctuations without owning the asset .
Conclusion: Understanding spot trading to invest better in crypto
Spot trading is the foundation of exchanges. It allows investors to actually own their digital assets , profit from fluctuations , and build a strategy tailored to their profile.
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Yoann
Trained as an engineer, I quickly became interested in the field of finance. Convinced that decentralized finance has a bright future, I am participating in its democratization by developing Crypternon.