What Is Spot Trading?
Also known as: Spot Market, Spot Trade, Spot Transaction
In short
Spot trading is a type of trading in which a cryptocurrency is bought and sold at the current market price and settlement happens immediately, meaning the buyer directly owns the asset itself rather than a futures contract.
When a user buys Bitcoin with Turkish lira (TRY) on the spot market, real BTC arrives in their account the moment the trade is executed. This asset can be withdrawn to a personal wallet, sent to someone else or sold. Trades are made in pairs such as BTC/TRY and ETH/USDT; the price is determined by the matching of buyers and sellers in the order book. Users can trade instantly with a market order, or at a price they specify with a limit order.
The fundamental difference between spot trading and futures trading is ownership of the asset. In perpetual contracts or futures contracts, the user owns not the asset itself but a contract based on its price, and can use leverage. In spot trading, on the other hand, there is no leverage unless a separate margin account is used; the loss is limited to the amount invested and there is no liquidation risk.
Spot trading also has risks. Prices can change very sharply in a short time, and as long as assets are held on an exchange, they are exposed to the exchange's security and bankruptcy risk. In addition, trading fees and the bid-ask spread can noticeably increase the total cost for frequent traders.
Last updated: · This content is for information purposes only and is not investment advice.