You are definitely aware of the various opportunities that buyers and sellers encounter in the world of cryptocurrencies. So, you may have definitely heard of the term spot trading should you be an active crypto enthusiast. What we will be talking about in this article is the concept of spot trading and how it works. 

What is it?

Spot trading is a method that takes place at the prevailing spot price or, in other words, market rate. To simplify the definition, it is simply when buyers and sellers either buy or sell a certain asset at a spot price at any exact moment in time. They do that in order for them to immediately receive the asset. Spot trades allows for the opening of short term positions without any expiry dates. 

For example, spot trades are triggered and initiated when the market rate or price reaches the amount you wish for. This means that they can prepared for in advance, which is also known as a limit order. You simply announce the price you want to buy the asset for and it takes place once that price is reached, simply.

“Physical markets” is another term

Some investors also use “physical markets” in order to refer to spot markets. They consider them as processes that are “effective immediately”. The transfer of the money can take some time, but that doesn’t mean that buyers and sellers cannot agree and confirm immediate trading. 

On the other hand, and unlike spot trading, there are the future transactions or non-spot trading. These allow the prices to be agreed upon now while the delivery to take place at a later stage. They are also called expected prices.