Introduction to Trading: Mastering Encryption Asset Trading from Scratch

Core Points

• Spot trading is the most direct and straightforward way to buy and sell assets, suitable for traders of all levels.
• Choosing a platform with strong liquidity, low fees, and a user-friendly interface is the foundation for successful trading.
• Compared to futures and margin trading, spot trading has more controllable risks and simpler rules.
• Mastering the use of limit orders and market orders is the key to efficient trading.

What is spot trading?

Spot trading refers to a trading method where assets are delivered immediately — you pay the funds and receive the asset right away. This is the most classic and straightforward form of trading, widely used in various fields such as cryptocurrencies, stocks, and commodities.

Unlike over-the-counter trading, most spot trading occurs on exchanges, which ensures the safety, liquidity, and transparency of transactions. For traders new to the cryptocurrency space, spot trading is an ideal starting point.

Spot Trading vs Other Trading Methods

Spot vs Futures Contracts

• Spot Trading: Transactions are settled immediately, and the assets you purchase belong to you.
• Futures Contract: A trading agreement for delivery at a future point in time, involving leverage and liquidation risks.

The key difference between the two is that spot is the actual ownership of the asset, while futures are bets on the future price movement.

Spot vs Margin Trading

• Spot Trading: Buy and sell with your own funds, profits and losses are proportional to your investment.
• Margin Trading: Borrowing funds from the platform to amplify positions can yield higher returns, but the risks also increase exponentially.

Margin trading carries the risk of forced liquidation (margin call), while spot trading does not have this issue.

Why choose spot trading?

Risk is controllable The maximum loss in spot trading is the principal you invest. There is no liquidation, no forced closing of positions, and the psychological pressure is relatively small. This makes spot trading the preferred choice for long-term holders and risk-averse investors.

Easy to Use Compared to complex derivative trading, spot trading is simple and straightforward—buy if you are optimistic, sell if you are not. This makes it very beginner-friendly.

Strong Flexibility You can buy or sell at any time, unaffected by contract expiration dates, forced liquidations, and other factors. The liquidity of funds is better.

How to Conduct Spot Trading?

Step 1: Familiarize yourself with the trading platform interface

After logging in to the spot trading area, you will see the following key sections:

Left Side: Order Book

• The red area shows the sell orders (Ask), indicating the prices and quantities that sellers are willing to sell.
• The green area represents the buy orders (Bid), indicating the price and quantity that buyers are willing to purchase.
• The order book reflects the supply and demand relationship in the market.

Middle: Trend Chart

• Real-time display of price changes for trading pairs (e.g., BTC/USDT)
• Supports various technical analysis tools

Right Side: Trading Pair List

• Display all available trading pairs
• The search function helps you quickly find the target currency.

Below: Order Area

• After selecting the order type, inputting the price and quantity, you can submit.

Step 2: Prepare funds

Before buying assets, you need to first deposit the corresponding funds into the spot account. Taking BTC as an example, you need to recharge USDT or other stablecoins into the spot wallet.

Step 3: Place an Order to Buy (Using a Limit Order as an Example)

Limit Order: You set an ideal price, and the order will be executed automatically when the market price reaches that price.

• Set the desired purchase price (usually below the current market price)
• Enter purchase quantity
• Click “Buy” to submit the order
• The order enters a pending execution status and will be automatically executed as soon as the price is reached.

Market Order: Executes at the current market price directly, fast but unable to control the specific execution price.

• Enter purchase quantity
• Click “Buy” to execute the order immediately

Step 4: Place Sell Order

The selling process is similar to the buying process. Taking a market order as an example:

• Select the “Sell” option
• Enter the sell quantity
• Click the “Sell” button
• The order will be executed immediately at the current market price.

View and manage orders

The bottom of the trading interface displays your order history and trading records. You can:

• View unfilled orders
• Modify the price or quantity through the editing function
• Use the cancel function to revoke a single order
• Batch cancel all unfilled orders

Practical Advice for Spot Trading

• Start Small: In the beginning, do not bet large amounts, first accumulate experience.
• Set Stop Loss: Even in spot trading, there should be a risk awareness.
• Market Analysis: Make decisions using technical or fundamental information.
• Choose trading pairs with good liquidity: Avoid obscure coins and ensure quick execution.

Summary

Spot trading, with its simplicity, flexibility, and controllable risk characteristics, has become the best gateway into the cryptocurrency asset field. Whether you are a beginner or an experienced trader, spot trading can provide a stable and transparent trading experience. By mastering the operational skills of limit orders and market orders, you can navigate the spot market with ease.

Start your spot trading journey now - simple, direct, and effective.