What is Spot Trading?
Spot trades are trades that are executed and settled then and there, as opposed to a non-spot trade, where, although the price is agreed on the moment, the exchange occurs at a later date. One can apply the spot trading strategy to pretty much any asset class, including stocks, FOREX, cryptocurrencies, and even commodities like silver and gold.
The price at which one buys or sells a financial instrument instantly, is referred to as the spot price, and is determined by the prevalent market and demand for a specific asset. For instance, if an asset becomes attractive, more people would be willing to pay more for that asset, and this will lead to an increase in that asset’s spot price.
Spot trading is useful for individual traders as it allows them to buy financial instruments at lower prices and sell them once the price goes up. However, this trading strategy is particularly beneficial for companies that might need a particular asset within a particular timeframe. For instance, if an airline company requires urgent additional fuel, they can simply buy it through the spot market and arrange to have it delivered within the next two business days.
Benefits of Spot Trading:
The simplicity and ease of spot trading is the reason that it is so popular with new or beginner traders. Other advantages of spot trading are:
1) Swift Delivery and Settlement:
A unique benefit of spot trading is that the trades are settled quickly. Generally, the settlement period for commodities, FOREX, and stocks is two business days from the day of the trade execution. Crypto trades, meanwhile, are settled instantly.
2) Lower Risk:
While margin trading does allow you to invest more than just your current balance, it also magnifies your risk and losses. On the other hand, spot trading ensures that, even in the worst of cases, your loss is confined to your initial investment. This is another reason that new traders looking to establish their strategies and skills are drawn towards spot trading.
The spot prices on an exchange are available for anyone to see. Moreover, the spot prices of an asset reflect the asset’s current value and are not based on some forecast or anticipation. This means that spot trading does away with the need to speculate prices.
With OTC (over-the-counter) spot trading, you can shop around for different deals and go with the option that suits you best. Also, if you feel that the current price is too low or think that the price will go up in the future, you can also hold your assets. Moreover, spot markets allow you to trade in smaller amounts – as opposed to derivatives markets, which often have minimum investment requirements.
Why Spot-Trade with Ejinvesting?
1) Wide Range of Markets:
Ejinvesting offers many different types of trading markets, which means that you are likelier to find your market of choice.
2) Instantaneous Execution:
Ejinvesting understands that, even a mere few seconds of delay in order processing, can have dire consequences for spot traders. This is why the brokerage guarantees instant order execution.
3) Large Number of Buyers and Sellers:
Ejinvesting hosts a large volume of buyers and sellers, which ensures higher liquidity. The brokerage firm’s international presence allows it to have many different buyers and sellers from different parts of the world.
4) Market Indicators:
Ejinvesting clients receive regular alerts and signals which allow them to make informed trading decisions. In addition, the firm also offers tutorials and guides that explain the way in which these market indicators work and should be interpreted.
5) Low Fees and Charges:
Not only does Ejinvesting charge a low trading fee and commission, it also has a negligible minimum deposit requirement, making the firm extremely attractive to traders of all levels.
6) Intuitive Platforms:
As part of delivering a seamless trading experience, Ejinvesting has ensured that its trading platform is intuitive but, at the same time, has a wide range of features and elements. In addition, the platform can be accessed through a website and an app.
7) Customer Service:
In case of any problems or queries, clients can reach out to Ejinvesting customer service representatives through phone, email, social media, and live chat.
To sum up, the unique benefits associated with spot trading make it one of the most popular forms of trading. If you are looking for a spot-trading broker, we strongly recommend going with Ejinvesting. To learn more about the brokerage and how it can help you achieve your spot-trading objectives, please feel free to check out the Ejinvesting website.
Disclaimer: This is a sponsored marketing content.