Crypto academy week 3 Home work post for @besticofinder. :- spot trading and margin trading

This post is against the Home work given by crypto professor @besticofinder.

This post is related to spot trading and margin trading.

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So let's get started

• what is spot trading

Spot trading is a concept taken from stock market. In stock market, the person who wants to sell his stock and the person who wants to buy the same stock and their price for stock matches, then as soon as the buyer pays for the stock, he gets the stock and when we see from the seller's perspective, as soon as he sends his stocks he gets paid

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So when similar concept is applied to the crypto currency market.
So when a buyer wants to buy any crypto currency at a specific rate, and the same coin is on sale by a person on that specific rate, then as soon as buyer pays, he got his coins without any delay.

In this trading no future date is given to send coins or money. So it's a very fast process.

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advantage of spot trading

There are many advantages of spot trading

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• There are a number of buyer and seller who wants to sell or buy the same coin. So most probably you will get the best deal. If you are a seller then most probably there will be someone who will buy your coin on a maximum price

•• as in this not many people are involved, so this process is very cheap. So you can transfer your coin on a very small transaction fees

••• as we have discussed, in this the transaction is settled on the spot. So it's relatively very faster than many other ways of trading.

• Disadvantages of spot trading

• If you want to buy or sell your coin instantly, then you might suffer loss. So to reduce this loss probability, you should wait for the best deal to assig.

•• as in this process, no future date is given, so there is a lack of planning.

••• the interest rate spot Market is not sovereign. It is affected by many external factors.

• what is margin trading

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Margin trading is the process in which you basically borrow from the broker or from the plateform itself.
Let's say, you want to buy 1000 steem coins at a price of 0.45 usd per coin. So for this you will need 450 usd. And you have only 300 usd to buy steem.
And you are sure that the price of steem will increase by leaps and bounds on the same day. So you borrow a amount of 150 usd from any broker or from the plateform itself.

But the only condition for this is that you will have to sell the coin on the same day.
So if the price of the coin decrease that day.. then you might suffer a huge loss.
So it's very risky.

advantage of margin trading

• the biggest advantage of the margin trading is that you can increase your buying power by borrowing the assets from any broker.
For this you must make sure that the price will go up otherwise you might suffee huge loss.

•• this trading is very flexible

••• with the increased buying power you will get the increased returns. This is the biggest advantage of this.

disadvantages of margin trading

• increased risk- as in this you will have to sell the coins on the same day them you might suffer a loss. So with increased buying capacity, your risk also increases.

•• the biggest disadvantages of this trading is that the plateform or broken can sell that assest without letting you know about it. So this is also a disadvantage of this.

conclusion

So the conclusion of this discussion is that, if you want to trade with less risk and you have fund to buy asset and you want the buying and selling process to done instantly then you should use spot trading

And on the other hand if you are ready to take risk and you don't have that kind of fund then you should use margin trading

Cc
@steemitblog
@steemcurator01
@steemcurator02
@besticofinder