Spot trading on a cryptocurrency exchange

Spot trading is the most common type of trading on the crypto exchangewhich is to buy and/or sell cryptocurrency and make an immediate profit (or loss). The efficiency of spot trading is enhanced by exchange tools. Exchanges provide approximately the same opportunities for spot trading, but there are nuances to consider.

What is spot trading?

After registration and opening an account on almost any crypto exchange, the user is on the spot market by default, all trading settings in trading terminals are spot market settings. All orders on such a market are spot (or cash). Spot market is a market with such terms of settlement of transactions between traders that provide instantaneous emergence of property rights, which is the main distinguishing feature of spot transactions. It is the dynamics of spot prices that determine the situation on the market of an asset, for example, cryptocurrency. Spot prices are 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 deal is a commitment to buy or sell a cryptocurrency that involves immediate delivery at the current market price, also called the spot rate. Advantages of spot trading include:

  • Accessibility. Almost any user can proceed with transactions at any time, and the fact that settlement is immediate makes them cheaper than executing transactions on fixed-term contracts;
  • The volatility of crypto-assets. This is exactly what gives traders and investors the opportunity to make money;
  • High liquidity, because the contract on the deal is executed immediately.

The disadvantages of spot trading are an extension of its strengths, and that is losses on unsuccessful trades and inaccurate calculations (cryptocurrency trading on the exchange). The risk increases significantly if trading is done with leverage. Volatility provides not only profits, but also losses. The spot market on a crypto exchange looks like a stock market glass that displays the activity of buyers and sellers. Buyers enter the market with their asset value (bid), which is the maximum amount they can spend. Sellers enter the market with their bid price (ask), which represents the minimum amount they are willing to sell their crypto-asset for. You can see all of these prices in the exchange tumblr and start trading based on these figures. Almost all exchanges, apart from the tumblr, have a whole set of tools that allow you to trade more efficiently - charts, indicators, trend lines, in several variations, from the simplest to the most complex. But, since spot trading is quite simple, it can be done without complex tools.

Spot crypto exchanges

Spot trading services are basic for almost every cryptocurrency exchange. Among them, there are "major" exchanges, which are the main and largest participants of the crypto market, forming the very structure of the cryptocurrency market, they are Binance (go online), Poloniex, Coinbase, Bitfinex and others. They are the ones that make spot trading available to anyone who can register at a crypto exchange, buy a cryptocurrency, sometimes for very little money, and start trading. The trading volumes and total capitalization of the largest crypto-exchanges are such that they can offer the most favorable exchange rates for hundreds of cryptocurrencies and dozens of fiat currencies. Crypto exchanges are feature-rich trading platforms that offer a large number of features that facilitate trading.

Data on crypto exchanges can be selected from CoinMarketCap, Cryptorank and CoinGesco crypto market information aggregator sites. Crypto exchanges are presented according to the rating, which is based on the evaluation of the daily trading volume. CoinMarketCap pays more attention to new or little-known crypto exchanges in the ranking. This indicator is important, but it is not enough when choosing a crypto exchange for spot (and not only spot) trades. But the truth is that the largest crypto exchanges with high trading volumes have the widest functionality, the best spot rates and all the necessary tools for effective trading.

Not all major exchanges work equally in the right languages, in the right regions, not all have the same registration terms and trading conditions. When choosing a cryptocurrency exchange, you need to consider as many parameters as possible. In addition to those listed, it is necessary to consider verification terms, terms of deposit and withdrawal of money, buying and selling cryptocurrenciesThe following are some of the features: personal finance protection, supported cryptocurrencies and fiat currencies, the amount of commission on all transactions and transactions. Almost all crypto exchanges require registration in order to start spot trading. But on some exchanges, even this, the simplest way of trading, requires verification. Registration, in most cases, involves entering your email and phone number, confirming it with a code or a link, depositing money, and you can start trading. But after that there may be difficulties and often there may be restriction in withdrawal of earned money until the verification is completed. Verification is a confirmation of the user's identity: the crypto-exchange asks for scans or photos of documents, in particular identity card, and sometimes documents that confirm the place of residence, such as utility bills.

Top spot cryptocurrency exchanges

Consider the most popular spot crypto exchanges.

Binance

The crypto exchange Binance (binance.com) is now #1 in the world, at least in terms of popularity and opportunities to participate in trading for all comers (How to make money on the Binance cryptocurrency exchange). Spot trading is presented in the "Trading" section, where in the drop-down menu you have to choose "Classic" or "Advanced" interface for trading. In general, they are similar, but the classic version (Fig. 1) has fewer tools for trading, although they are quite sufficient for implementing strategies of any complexity.

Image. 1

The main "tool" of spot trading is placed to the left of the price dynamics chart, which is located right in the center of the main page. By default, the page shows trades in bitcoin/dollar pair, BTC/USDT, price changes within one day. You can choose another pair in the service to the right of the central chart - click on the desired pair from the list or select it through the search box in this tumblr. It is necessary to choose carefully, because there are a lot of cryptocurrencies on the exchange. You can choose pairs based on the exchange's internal token - BNB, or in BTC, or in altcoins, or in fiat currencies or by investment zone. On the chart you can choose the period of price change, from 15 minutes to 1 week, in the drop-down menu the choice of time intervals is more. The chart can be presented in a "Basic" version, we can say a simplified one. By default, the TradingView chart is more complex - at least at the initial stage of participation in trading, you should switch to the basic chart. It is quite enough to assess the trend direction and the market situation. For a more thorough assessment of the situation, the chart can be expanded to the entire monitor.

Also on the chart you can choose a technical indicator - in the base chart there are a few, but these are the main, most popular tools, and they are more than enough for the implementation of many trading strategies. The stock market slider in the pre-installed version shows the latest trades, both for sale and for purchase, but you can switch it to show only sell orders or buy orders only. The ability to make spot trades on the exchange is pre-installed, it is carried out in the service under the chart. The service allows you to set limits, stop limits, go to the simplified market, and buy or sell cryptocurrency. When the user starts buying or selling, the "Open Orders" section at the bottom of the page shows comprehensive information about the open order. All placed orders can be canceled, there is a button on the right. Completed deals - as a whole on the market or only your own deals, can be seen at the bottom right of the chart. And below this bar you can see "Important in the market" - here large deals are shown, and this is a useful section, because large deals can almost instantly affect the value of the traded asset.

OKEX

The largest crypto exchange OKEX (go online) also presents spot trading as the main one (Fig. 2). The market dynamics can be displayed by the original chart or by the TradingView chart. There is not much difference between them, both charts show the price dynamics in the main part, at the top, and the volume dynamics at the bottom.

Image. 2

It can be difficult to navigate in the graph if you don't know English - the terms are not translated into Russian. What you can guess is that you can change the time period on the chart, from one minute to one year, and even more options in the drop-down menu. The fact that there are very short periods on the chart is a definite advantage, as it allows you to conduct high-speed trading strategies. There are various types of Average Lines (MA) on the chart, you can change the candlestick chart types and choose indicators. To do this, click on the appropriate section on the chart, but the indicators will appear at the bottom of the chart, lined up in one line. These are basic indicators for each type of trading, the selection of which is sufficient for the implementation of any indicator-based trading strategy. The "Tools" section contains almost the same indicators. On the left side of the chart you can see a large set of different trend lines. Below the chart on the left there are buttons to deposit and transfer funds. Chart TradingViewThe "Toolbox" is essentially the same as the original, but a set of some tools is placed on the right side.

The Exchange glass is located almost in the center of the trading terminal. In addition to the part that shows the dynamics of transactions, you can switch to the "Trading history" - this can be useful for assessing the situation in the market. You can leave the order book in its original form - last buy and sell deals, or leave only buy or sell orders. Buy and sell orders are executed in the service on the extreme left side of the trading interface. The exchange insists primarily on buying cryptocurrency - there are as many as two buttons for that. But you can also sell. You can buy with set limits, in the market and with set take profit and stop loss. The user's order history and complete order description can be found at the bottom of the trading terminal. From the trading terminal you can use the "Market Data" button to go to the corresponding page, which contains, among other things, information about the state of spot trading - this is for users who have more or less understood how the crypto market works and can learn something useful from this section.

Huobi

Huobi (go online) notifies the newly arrived user that he will first engage in spot trading (Figure 3). On this crypto exchange, the order book is located to the left of the central chart. The book can be left in its classic form - in the sell and buy order columns, or switched to a more convenient version, and you can see the history of transactions without splitting. As with most exchanges, the original chart is presented, and the TradingView chart, as well as everywhere else, there is a market depth chart.

Image. 3

The original chart is more of an informative character, because it does not have any additional tools, and it is not possible to implement any indicator strategy with such a chart. Instruments can be found only on the TradingView chart, although at this exchange it is not made very accurately either. It is difficult to understand anything due to the large number of numbers, which are placed directly on the chart. At this exchange the order book is placed on the right side of the chart, it can be switched to buy or sell only. On the left side of the chart is a selection of cryptocurrencies and fiat currencies for trading. At the bottom of the site - personal transaction history. Cryptocurrency buy and sell form is placed below the chart. The form is standard - you can limit the amounts, set stop-limits, in addition, you can choose leveraged trading right away.

Bithumb

About the possibility of spot trading on the Bithumb (go online) unambiguously hints at the corresponding section of the crypto-exchange. Here is the base terminal (Fig. 4) for trading and the global terminal. The basic terminal is simpler and more understandable, although the functionality is essentially the same as in the global version. But the global version of the terminal has more tools for advanced trading. You can switch from spot trading to margin trading right on the chart. In the global version of the spot terminal all the tools for trading are on the right side of the terminal, with only the chart on the left. In the global version, the selection of trading pairs is placed directly above the chart, in the drop-down menu.

Image. 4

To the right of the base chart is the selection of the pair for trading, and here you can immediately start trading with a leverage of X10. Under this service is the history of successful trades. The service of buying and selling cryptocurrencies is in the center of the terminal, and the stock market stack is to the left of it. It has a quick order function. The global version has a "Stack" chart, which shows the depth of the market, matching the chart of buying and selling in motion. The chart can be switched to full screen mode.

EXMO

EXMO (go online) is a popular crypto exchange in the CIS market, there are two sections for trading in the market - "Quick trades" and "Extended trades". Both are spot trading. The terminal for quick trades is a service where you can select a currency pair - from the list on the top right of the interface or in one of the "cells" with two functions "buy" and "sell". There you can also see a very primitive price chart, quite sufficient to understand the trend direction, the rise or fall is also indicated as a percentage. The service is more suitable for investors who are not particularly interested in trading schemes, but who need either to quickly buy cryptocurrency, or quickly sell. "Advanced Trading" is a classic trading terminal, the main part of it is the TradingView chart with the preset bitcoin/dollar pair. The selection of cryptocurrencies and fiat is on the right side of the chart, the trading history is placed under it. The buy/sell service is placed directly below the chart, with the order book to the right of it. As you can see, technical capabilities for cryptocurrency spot trading on cryptocurrency exchanges are almost the same, the only difference is in the placement of trading terminal blocks and visual clarity of information presentation. The order of trading is also no different and, in general, represents such a process on the example of the stock market stack on the BTC/USDT spot market (Fig. 5).

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Image. 5

The red color in the order book traditionally denotes BTC at prices that sellers are offering at the moment. Green marks the maximum prices at which buyers are willing to buy BTC. The bitcoin value is, of course, indicated per bitcoin. The "Amount" column shows the number of bitcoins (parts of bitcoins) to sell, the "Total" column shows the amount in dollars (you can choose other currencies to the left of the chart). Thus, the buyer can look for the bitcoin amount he wants at an interesting value. In order to sell or buy an asset, the user must have enough money in his account. Buying and selling is a very simple and quick process, so one has to check the numbers very carefully before carrying out a transaction. When a purchase is made, the stock ticker will automatically update and remove the quantity and price. This is called removing liquidity (volume and availability of any asset) from the stock market.

The placed offer to buy is called a market order. In some cases, you want the trade to be executed as quickly as possible, then the order is placed at a price below the best selling price. The difference between the best bid and ask prices is called the spread. When a buy order is placed, liquidity will come in and the user's offer will be in the stock market until someone agrees to sell the VCP at the buyer's desired price. The order may not be executed if the price is not realistic at all, then a new order will have to be placed at a reasonable price - and it is determined by the market, and what prices are now, in principle, acceptable, just visible in the stock market. On the crypto exchange the dynamics of transactions is consistently high, so you need to carefully monitor your actions, check the numbers you enter when buying and selling.

Spot trading strategies

Spot trading is just the kind of trading that involves the ability to apply various strategies using trading tools (lines, indicators, etc.). There are four main areas of cryptocurrency trading, in which any strategy is built in one way or another (options for earning on cryptocurrency). The most common and simple method is to buy and hold. Actually, the trading process is limited only to buying cryptocurrency, if possible, on favorable terms (but more important is the belief that the cryptocurrency will grow in the future). After buying, the holder (hodler) does nothing, keeps the cryptocurrencies in his wallet, sometimes even cold, in the hope that they will rise in price. So far, this strategy has been quite workable as the price of cryptocurrency rises. Hodler can simply forget about cryptocurrency, or he can regularly check prices, including from information on a cryptocurrency 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.

Trading on fluctuations is a classic method of trading, which consists in the fact that the trader takes into account fluctuations in the trend and places orders to buy or sell, predicting, respectively, an increase or decrease in the value of the cryptocurrency. There are many indicators and other tools for strategies based on fluctuations, some of which can be found in cryptocurrency exchange terminals. Indicators and trend lines in technical analysis are needed to see signs of the beginning of a trend change. Thus, in order to trade on fluctuations, a trader must have certain knowledge - to understand what a chart is, what information it carries, to adapt it to his strategy, to use the tools and to be aware of the general situation on the crypto market.

Intraday trading is a method of spot trading that involves opening and closing orders on a crypto exchange within the same trading session during the day. Positions opened during the trading day are not carried over to the next day. During the trading day, the trader implements one of the strategies of trading on fluctuations. Scalping is a high-speed trading in the process of which the trader conducts a large number of transactions, opens and closes positions within 1 to 15 minutes (arrow scalping strategy). In theory, each trade brings a small profit, but in the end, the profit from each trade forms some large income. In reality it may be the other way around. Scalping strategies are the same as trading on fluctuations, only in a small period of time, which implies a good command of all trader's tools and stress tolerance. In order to successfully implement spot market strategies, if it is not a matter of just buying and holding, you need to understand what is going on in the crypto market. The advantage of crypto trading is that entering this business is inexpensive and available to almost everyone, but if the goal is effective trading, then without understanding the market, trading will be a costly waste of time.

Before you start trading, you need to practice on the demo modes, respectively, it is better to choose an exchange that provides such opportunities. Exchanges also provide many instructions, video tutorials, - all this you need to use. Some exchanges even practice a kind of exams for some types of trading. Having more or less understood the essence of what is happening on the crypto market, and having practiced, you can try to engage in real trading. To do it, you have to make a trading plan, where the process will be divided into stages, the goal of each trading period will be stated. When implementing the strategy, it is necessary to record the results so that you can work on your mistakes later on. In addition, it is necessary to keep abreast of developments on the crypto market, which is characterized by rapid development, the emergence of new methods of earning. It is necessary to make a list of information sources - news, subscriptions to market experts, groups and channels in social networks - that will allow to better assess trends, which will have a direct positive impact on the efficiency of spot trading.

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