Introduction

Most virtual assets are interchangeable, this means that they have the property of being equivalent in another cryptocurrency while retaining the value of the initial token.

With the exception of some cryptos which do not operate in any Exchange since they were created with a specific utility, such as: Support of a particular economy, accumulation in stakes, consumption of specific products, game tokens, internal market, among others.

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Cryptocurrency market is a space for buying and selling securities, you can find it on any platform that provides financial exchange services whose interface has to offer current quotes, real-time transactions, order registration, exchange pairs, charts, etc.

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It should be noted that each operation corresponds to a P2P smart contract generated at the request of the interested parties, which will be subsequently unlocked at the end of the transaction, once the deposit is made. This record is stored in a block which is incorruptible and is available as proof of the agreement in case an audit is required.

Spot market

This movement of virtual assets is referred to as "Spot Market" as it is done automatically and based on the current trading rate.

The client that subscribes an order has liquidity of the virtual asset that he puts in play and his transaction is linked to an existing pair that also enjoys absolute liquidity, for that reason it is considered a spot payment, since both parties to the contract are willing to close the transaction in real time and have the resources to do so. A smart contract that settles instantly.

Advantages

• The trader has his own capital and does not depend on any other mechanism to realize the investment.

• Profits are net

• Spot trading is instantaneous and with immediate settlement.

• The spot trader develops his own methods, he is obliged to use his own skills and knowledge.

Disadvantages

• Requires automatic liquidity to be able to initiate trades

• Some preparation and knowledge is required for successful trading.

• It is necessary to adjust to the rates of a certain service provider and pay commissions for each exchange.

• You do not have any advice

Margin market

In a margin market the trader seeks support from a broker who provides the amount required to operate in exchange for some guarantee, such as certain percentages of investment, stocks, bonds. It consists of a type of loan to carry out the transaction in the market with a certain term of liquidation. The margin is established with certain conditions which cannot exceed 50% of the leverage. Since the investment could also go to losses, in such a case, the broker will notify a margin call, so that the capital can be mobilized.

In general, the broker can never lose and among its benefits are, apart from the loan, also considered the technical services for operation, maintenance, consultancy and reliability. To access the services of a broker in a margin market, you must join a trading services platform, which will require a certain payment to start trading.

Advantages

• You can start operations without having liquidity

• You have the advice of a Broker to obtain results.

• You do not depend on the conditions of a virtual service provider (the negotiation is directly with the broker).

• There is a margin of reliability

Disadvantages

• Profits are not net (Broker keeps a percentage of the profit)

• You must pay for the broker's services

• You must put some property or asset as collateral (stocks, bonds, etc).

• The market has a time limit for settlement (Two days and upwards)

• You must initially subscribe to a specialized trading service which you must pay for.

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Comparison of spot market and margin market.

Each type of virtual asset market has its pros and cons, however, each is geared to the specific possibilities and needs of the trader, for a given time. Both markets allow you to trade freely and obtain favorable results.

But when comparing both modalities, it can be said that the spot market is recommended to gain experience through the acquisition of own knowledge and management of trading tools, since the operations are carried out directly by the trader who is forced to learn the mechanisms of negotiation. The spot market could be recommended for inexperienced users who need to take the first steps on their own in virtual currency trading, learning how to handle charts, values, rates and search for sites of interest. As for the margin market, I consider that it adapts to clients already installed within virtual trading, who have the ability to trade with pre-established time frames, as well as having certain assets that they can leave as collateral for the negotiation with the broker. In fact, the margin market enjoys a certain complexity superior to the margin market, which could make it somewhat difficult to understand for a beginner. Although the choice of the exchange pair and the settlement periods are selected exclusively by the trader, however, after making an initial investment, it is left in the hands of the broker who, according to his experience, provides the financial services that will guide you to a successful negotiation.

Finally, once again, the general characteristic of "Trading" is fulfilled, which is the ability to adapt any type of trader according to his needs and aspirations within the virtual market.

Exchange rates

Fees correspond to the fees we must pay to trade with a particular financial service provider. Sometimes we must pay for operating on the site and also for each transaction made. The fees vary for each exchange according to the type of cryptocurrency, it is recommended to investigate in advance the value of the fees before operating and thus avoid unforeseen expenses.

I will take as an example, some real life cases which I have experienced along my trajectory in the Blockchain.

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Use case 1

My own experience using Ionomy and Provit

On occasion I have been struck by some exchange operators that associate exchange pairs with a specific crypto for internal trading. Such is the case of Ionomy Exchange, in which you must initially exchange for "bitcoin " the amount of crypto you wish to trade, once converted to bitcoin, you will have a choice of the other available pairs. If you look closely, you would be paying a commission to the platform for this first exchange to bitcoin, so you would increase the estimated amount for your investment by paying additional fees.

I also had the experience with another exchange called Provit.com, which adopts the Stablecoin "Tether " as its exchange pair, for which you must also first convert your tokens and pay a respective fee to be able to dispose of the other cryptos. Most of the exchanges use this modality to operate in their internal market, so I would recommend you to take a good look at the rates and draw your own conclusions before proceeding to place the order.

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Use case 2

My own experience using Steem-engine and Internal Market Steemit.com

There is an easy to use spot market which operates with SMT (smart media tokens), STEEM, STEEM fork tokens, among many others. I am referring to the Steem engine platform where you can login with your Steemit.com passwords and in turn, pay minimal exchange fees. The site is user friendly and has the basic tools of any exchange to make the user experience easy and enjoyable. You will be able to buy and sell tokens, send to different wallets, view orders, bullish and bearish candlestick charts, with very short waiting times, besides being operating under the same Steem Blockchain architecture, for added security and confidence.

I believe that the best way to become familiar with the spot market is to experiment for yourself. From my side, I have gained self-confidence by trading on Steemit.com internal market, it should be noted that this modality is designed only for STEEM and SBD exchange, but in general terms it consists of something similar to trading on another more complex Exchange. I could recommend any new user who is taking the first steps in crypto trading to take some time to see how Steemit's internal market operates, so you can get to understand the basic principles of an exchange, visualize the buy-sell orders, make trades and even manage the possibility of making some profit with the fluctuation of STEEM and SBD, which currently have gained value.

Use case 3

My own experience with Binance and Bitrex

On my part as a student of the Crypto academy and faithfully following the advice given by professor @besticofinder, I have proceeded to open a "Binance" account, as the service offered promises to be very efficient and inexpensive. I understand that Binance is a financial service provider that operates with a large number of cryptocurrencies of the most traded in the market, also offers a set of tools that manage to expand the user experience. I think the most difficult step, at times, is usually the KYC validation requirement, for which you should have on hand documentation related to: Passports, driver's license or identity card, in addition to having to have a smart device that allows you to take a selfie-type photo online. However, this does not prevent you from creating your account. Some other service providers such as Bitrex.com also demand the KYC requirement to start operating.

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Final thoughts

I think Crypto academy offers every week an opportunity to learn everything related to the crypto world. I feel that I have gained a great deal of knowledge over the past three weeks, as well as staying active in study and with a constant posting frequency. To become an experienced trader we must properly master the market tools; from the operation of an exchange to the management of statistical data. Everything plays a fundamental role so I would recommend everyone to take advantage of this initiative sponsored by @steemitblog to get as much experience as possible to take the most successful steps in crypto trading.

This is my homework for this week. I wish you all the best of luck and I thank professor @besticofinder, for this new academic class.

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This is my entry to the contest sponsored by @steemitblog: Steemit Crypto Academy Weekly Update #3 [ February 22nd, 2021 ]. In reply to homework assignment by teacher: @besticofinder [ Sri Lanka ], Lesson 3 : How to spot trade ? Everything a beginner need to know. I call on all Steemit.com users to join the initiative. @betzaelcorvo, @juanmolina, @corinadiaz

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