“Spot trading” is a buy now, pay now deal where you can buy bitcoin (or other cryptocurrencies) with fiat or altcoins.
- “Spot trading” refers to the buying or selling of cryptocurrency (or other assets), where trades are settled immediately and the asset is physically delivered at the time of purchase.
- With spot trading, the exchange settles trades immediately and the underlying asset changes hands.
- Spot markets differ to derivatives markets since spot trading involves taking ownership of the actual asset.
- The derivatives market for bitcoin are contracts based on the spot price, usually taken from several of the high-volume spot exchanges.
- Spot trading differs from derivatives markets as derivatives allow you to trade paper representations of the underlying asset.
Spot Trading Example
Suppose you want to buy 0.5 BTC at spot and the current market price (or spot price) is 9,000 USDT.
To execute the order, you will need at least 4,500 USDT in your trading account. Once the order is executed, your Tether (USDT) trading balance will decrease by 4,500 USDT and your bitcoin (BTC) trading balance will increase by 0.5 BTC. You can then withdraw your coins to a wallet you control to take ownership of those bitcoins.
In contrast, you do not take ownership of the underlying asset with derivatives trading. Instead, you are trading a contract that represents the value of bitcoin. You can also borrow funds to leverage your position with derivatives trading, enabling you to open a position larger than the size of your trading account.
Spot Trading on Interdax
Most cryptocurrency exchanges offer spot trading, where you can buy and sell bitcoin, altcoins, and fiat currencies or altcoins. When you execute a buy order, you are buying the real asset - bitcoin, which you will be able to withdraw and take ownership of.
Interdax currently offers the following spot pairs:
To start spot trading, log in to Interdax (https://www.interdax.com) and click on the Instruments panel on top of the trading chart.
Once you click on the button, the Instrument menu will appear.
Choose “Spot” to see the markets, leverage, settlement and percentage change. You can then click on the spot market you want to trade, e.g. BTC-USDT.
You can choose an order type and quantity for your trade using the order on the left-hand side of the chart.
For the BTC-USDT Spot pair, the quantity for your trade is the amount of bitcoin you want to buy or sell.
The order panel displays the type of trading order (limit, market, stop limit, stop market, take profit, and take limit), the quantity (and limit price), and two buttons for buying and selling. You can only trade up to your available balance, which are displayed for each asset at the bottom of the order box.
You can also check your balances on the left-hand side with the Browser panel and click on “Balances”.
Market orders are executed immediately at the best available price. Once you have submitted your order, a confirmation screen will appear. A notification for your order submission and completion will appear on the bottom right-hand side of the screen.
Limit, stop limit and take limit orders can be used to trade BTC-USDT spot.
When choosing a limit order, you can set the limit price using the slider or by entering a price in the ‘Limit Price’ box. Enter the desired quantity into the Quantity box.
You can also choose from several order flags for your limit order under certain conditions. Hovering over the list or “GoodTillCancel” explains the options, which include “GoodTillCancel”, “ImmediateOrCancel”, "Post Only" and "Hidden". Read more about time in force options here.
Once the limit order is submitted, you’ll receive a confirmation and the limit order will be visible on the trading chart and on the order book. The open orders are shown in the Active Orders tab of the Positions panel, as shown below:
Another confirmation will be displayed once the index price reaches the limit price and your order will be processed.