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Understanding a Spot Trade

Dear Global Bitgetters,

Spot Trade

The act of buying or selling a currency, or a financial instrument for prompt delivery on a specific date is referred to as a spot trade. The majority of spot contracts require the actual delivery of the money, good, or instrument; the price difference between a future or forward contract and a spot contract accounts for the time value of the payment, which is determined by interest rates and the length of time until maturity. The exchange rate upon which a foreign exchange spot trade is based is known as the spot exchange rate.

To facilitate spot trading, centralized exchanges for spot trading manage regulatory compliance, security, custody, and other elements. Exchanges receive transaction fees in exchange. Similar services are offered by decentralized exchanges, except they use blockchain smart contracts.

By expecting an increase in their value, spot traders buy assets in an effort to profit from the market. When the price rises, they can profitably sell their assets on the open market.

Spot Price

The market value of an asset is referred to as its spo t price. Use a market order on an exchange to quickly buy or sell your assets at the best current price. While your order is being executed, there is no assurance that the market price won't change. Furthermore, there might not be enough products available to fulfill your order at the required price. If, for example, your order is for 10 ETH at the spot price but only 3 are available, you will need to fill the rest of your order with ETH at a different price. As orders are matched, spot prices are updated in real-time. Spot trading over-the-counter operates differently.

Bitget Team