Steemit Crypto Academy, Homework Task for Professor @besticofinder. Spot trading vs Margin trading an helpful beginners guide.

Cryptocurrency trading comes in different shapes and forms, I was excited when I found this topic because reading about it will provide me with a better insight on what each of these trading methods really signify.

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Spot trading

While going about spot trading, it usually has to do with the transaction and immediate delivery of either commodities or assets. The spot market is the home of sport trades, every sport trading transaction is usually carried out in the spot market, and on sport trade the price change does not affect the delivery of asset or goods.
Let me give a quick illustration of what I am referring to, if through spot trading you paid for a commodity when it was priced at $5 and on a usual volatile market, there is a price change and the price changes to $8 before the commodity was delivered to you, the price change does not affect you in any way meaning you will not need to add any extra money to have your commodity delivered to you.

Margin trading.

Margin trading providers traders with the opportunity that they need to be able to access more funds that they need for their trading experience, but before traders get the access to the funds that they need, they will be required to make a commitment with a certain amount and the percentage that they will be asked to commit will vary depending on the trading platform used.

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Advantages and Disadvantages of Spot Trading.

A transparent market is one of the advantages of spot trading, everything is transparent for both the buyer and the seller to see.
The funds, commodities are received almost immediately, there is usually no delay in respect to this. With spot trading, there is also room to invest as little as you can.
The disadvantage associated with spot trading is the risk of the volatile market subjecting the price to sudden change at any time and the investor might be running at a loss with this.

Advantages and Disadvantages of Margin Trading.

Margin trading provides the opportunity to meet more demands and make more profit in the process as well, instead of just using the available funds, there is a leveraged opportunity to use other people’s fund to our advantage.

A great disadvantage with margin trading is the risk involved, the high risk involved with margin trading could make a trader lose as much as his entire capital and for a trader who do not have the emotional capacity to handle cases like this, it is usually disastrous.


I say a big thank you to the steemit team for this great privilege and to @besticofinder for this intelligent lecture and assignment.


Comments 1

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27.02.2021 03:15