Some Facts about Spot Market

In crypto trading, there are the terms spot market and derivative market. Some people may have been involved in both or may not even know about them at all.

There are several differences regarding the spot market and by knowing these differences you will be wiser in making trading choices.

SPOT MARKET IS NOT SUITABLE FOR SMALL CAPITAL TRADERS

Even though it seems trivial, playing in the spot market with small capital will only waste time and energy. This is because the spot market does not recognize ROI. Some exchanges don't even have a leverage option, if any, with minimal features.

Another option, crypto price movements are slower. With a fairly low up-down ratio, it is likely that significant profits will last a long time.

ONE DIRECTION

The spot market is generally one-way. Only a few exchanges provide long or short options, even with limited pair choices and features.

For example, order type, most spot markets adhere to market orders. Then features like TP/SL are rarely found in the spot market.

With this one-way price, traders can only take long or buy positions, they cannot mix them like the derivative market.

However, the spot market has several advantages, such as more stable price charts and lower liquidation risk.

PRICE AND DATA TRANSPARENCY

Sometimes some exchanges present data and prices not in real time. This is quite worrying if the choice of buy or sell position can deviate from estimate predictions because generally spot market data is quite different from the derivative market.

Another problem is unproper advanced features such as notifications, preference signals, and widgets.

HOW TO GET STARTED IN THE SPOT MARKET

First is to choose the type of trader. Some people are suitable as Daytraders, buying and selling assets on the same day, some prefer Position Traders, trading over certain time periods.

Second, choose your favorite crypto. Forget about Bitcoin, Ethereum or any particular Altcoins. Choose coins with good prospects, for example a significant up-down ratio or daily profits of up to tens of percent.

Third, make the choice to take a position at the current price or wait for a more realistic price. Likewise, future price prospects, for example by looking at graphs of coin prices in the past via Google or AI to estimate future prices. Another option is to look at the credibility of the token on the official site, ecosystem and community.

Another option that is no less important, crypto charts tend to be parallel, if the main token goes up, altcoins and the metaverse also go up.