Definition
Spot trading means buying or selling the underlying asset for settlement immediately or within the market’s normal short settlement period. An ordinary, fully funded crypto spot purchase gives exposure to the acquired asset without a futures expiry or perpetual funding payment. This does not imply that every order executes instantly.
How It Works
A trader selects a pair, such as ETH/USDT, and submits a buying or selling instruction. A market order seeks available liquidity, while a limit order specifies the worst acceptable execution price. On a custodial exchange, a completed trade normally changes account balances; a separate withdrawal transfers assets to an external wallet.
For illustration, buying 2 units at 100 USDT each costs 200 USDT before fees. Selling both later at 110 USDT yields 220 USDT before fees, producing a gross gain of 20 USDT. If the price instead falls to 80 USDT, the two units are worth 160 USDT. These are hypothetical prices, not a return forecast.
Key Considerations
Using only available funds avoids borrowing-related liquidation, but the purchased asset can still lose substantial value. Fees, spreads, slippage, custody, and withdrawal restrictions matter. Spot margin trading adds borrowing and different risks; it should not be confused with an unleveraged spot purchase.