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Spot trading is buying or selling assets like stocks, crypto, or currencies at the current market price (the "spot price") for immediate delivery and settlement, making it a straightforward way to own the actual asset, popular for short-term moves, unlike futures which lock in future prices. Traders profit by buying low and selling high, directly owning the asset after purchase, making it simpler and transparent for beginners.  

How it works

Direct Ownership: 

You buy the asset (e.g., Bitcoin, Gold, USD) and it's transferred to your wallet or account. 

Real-time Pricing: 

Trades happen at the exact moment, reflecting the current supply and demand. 

Immediate Settlement: 

Delivery and payment occur almost instantly, usually within two business days for traditional assets. 

Market vs. Limit Orders: 

You can use market orders (buy/sell at current price) or limit orders (set your desired price). 

Key Characteristics

Simplicity: Considered less complex than derivatives (futures, options) as there's no expiry or leverage involved by default. 

Liquidity: High activity means good liquidity, making trades easy to execute. 

Risk: Subject to price volatility; profits/losses aren't realized until you sell. 

Spot vs. Derivatives (e.g., Futures/CFDs)

Spot: Buy/sell actual asset for immediate delivery at today's price. 

Derivatives: Trade contracts based on future price movements without owning the asset, often using leverage (borrowed funds), which magnifies gains and losses. 

Example

You buy 1 share of a stock at $100 (its spot price). If the price goes to $110, you can sell it for a $10 profit per share, taking direct ownership and control.