TRON price [Aug 16, 2024]
leos11
Spot Trading; Pros and Cons.
lhorgic
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2024-02-29 13:49:27
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Hello friends, welcome back to my blog. I trust you're keeping well. I want to also believe you got value from my last post, yeah! So today we would yet be looking at our previous topic of discussion but then we would be considering the **pros and cons**...of Spot Trading.
Of course we all know that there's nothing advantageous in this world without disadvantages as well but knowledge can always guide us so much so that we can always make informed decision. Let's get into it right away friends.
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• **Immediate settlement:** spot Trading/Market, guarantees immediate settlement of trade. If you're a trader who seeks instanteneous deal, then spot trading is your best bet because it can assure you of instanteneous deal as payment and delivery of asset occurs almost simultaneously.
I won't be wrong to say trade in the spot market is executed real time. This is why most traders love to spot trade as they do not have the luxury of time and patience to linger in the market waiting for settlement. In a nutshell spot trading is swift and efficient.
• **Transparent pricing:** Pricing in the spot market is quite fair and transparent. This is because prices are not just fixed by participants, price are influenced and controlled by the demand and supply force in the market.
This is unlike other type of market where traders singlehandedly determine what price they want to sell or buy. They do this by using the limit order feature on an exchange. The transparency of price in the spot market make the market more healthy and help investors make good and informed decision.
• **Flexibility:** A trader in the spot market enjoys flexibility as he or she can enter and exit a trade as many times as possible no matter the quantity involved. This is one of the advantage you might not get outside the spot market, it's just that flexible and seemless as it all depends on you as you can buy and sell in quantities you so desire.
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• **Asset Ownership**. Spot trading guarantees traders of ownership of whatever asset traded. These assets can further be used by the owner as he deems fit because he now owns them. This is not the same with futures trading because when you take a buy position, you do not own it until some future date when you will be settled and that is when everything goes right.
• **Less Risky:** Generally, dealing with crypto involves risk but when you compare spot trading with other kind of trade like futures and margin trading, you would agree with me that spot trading is less risky. A spot trader can not loss more than he has, but in margin for example, you can loss more and still get a margin call to add more margin in order not to suffer liquidation.
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• **Lack of leverage:** Spot market do not have the leverage feature which help amplify the capital of a trader. It therefore means that as a spot trading, you must have your desired capital **in full** for your trading activities and you know this alone can limit trading opportunities for spot trader as they won't be able to augment their capital for bigger and better profitable trading opportunities.
• **Limited trading hours:** Most spot market has trading hours in which traders can do their buying and selling activities, anything outside that time would definitely not work. This then become a constrain to those whose time zone ain't compatible within this hours and I guess you know the end result for such folks, they would definitely miss some profitable price movements.
• **Market volatility:** Spot traders like to take shot term opportunity in price movements but sometimes they could be caught up in high negative market volatility which could result in loss for them within that short period of time. A spot trader would then have to devise another means to stay afloat. Such means could be more patience to allow for positive change in price for him to realize some profit.
• **Limited asset availability:** Here is a sad fact, a disadvantageous one at that. The beauty of every market is to have people with more than enough of their needs. Spot market have limited coin or asset which make is a bit difficult for spot traders to trade their desired coin.
This is unlike other market like futures that is saturated with all manner of coin and asset plus maintain high level of liquidity.
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There you go friends.I would love to wrap it up at this juncture. I want to believe you've gotten so much from this piece. As my usual custom is, I would always encourage that you DYOR to be sure of every financial step you would want to take as I won't be liable for any form of loss encountered by you.
Feel free to share with me your thoughts in the comment section. Thanks for your time once again. Gracias!
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**Disclaimer: This post is made as an education and not investment advice. Digital asset prices are subject to change. All forms of crypto investment have a high risk. I am not a financial advisor, before jumping to any conclusions in this matter please do your own research and consult a financial advisor.**
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Regards
@lhorgic♥️
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