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What’s a Spot Market?
A spot market, also known as a cash market, is a public financial market where assets are traded instantly. In this market, a buyer purchases an asset from a seller using fiat or another medium of exchange. The delivery of the asset is usually immediate, depending on the asset being traded. Payments are made upfront by traders. Trading in spot markets can be facilitated by exchanges or conducted directly with others in over-the-counter (OTC) trades.What’s Spot Trading?
Spot traders aim to profit by buying assets with the hope that their value will increase, allowing them to sell for a profit later. They can also short the market by selling financial assets and repurchasing them when the price decreases. The current market price of an asset is the spot price. Traders can use a market order to buy or sell immediately at the best available spot price on an exchange. However, the market price may change during order execution and there might not be enough volume to fulfill the order at the desired price. Spot prices are updated in real-time and change as orders are matched. Over-the-counter spot trading allows traders to secure a fixed amount and price directly from another party, bypassing the need for an order book.Advantages of Spot Markets
- Immediate ownership: In spot markets, you gain immediate ownership of the commodity or security.
- Price transparency: Spot markets often offer more price transparency compared to futures markets.
- No worries about liquidation: Spot trading allows for a “set and forget” approach. It eliminates concerns about liquidation or margin calls, common in derivatives and margin trading. Traders have the flexibility to enter or exit trades at their convenience and constant monitoring of investments is not necessary unless engaged in short-term trading.
Disadvantages of Spot Markets
- Liquidity issues: Some spot markets may suffer from low liquidity, making it difficult to buy or sell large quantities of a commodity or security.
- The concerns of HODL: Spot markets may result in the possession of assets that are challenging to manage, such as commodities. For instance, spot purchasing crude oil necessitates taking physical delivery. Holding cryptocurrencies also requires ensuring their security and safety. However, trading futures derivatives allows exposure to these assets with the convenience of cash settlement.
How to Trade Spot on Bithermes
Bithermes is a popular platform for spot trading. Here’s a step-by-step guide on how to start spot trading on Bithermes:- Create an account: Sign up on the Bithermes website.
- Deposit funds: Transfer the funds you wish to trade with into your Bithermes account.
- Choose your asset: Select the commodity or security you want to trade.
- Start trading: You can now start spot trading on Bithermes.
