Basic terms you need to understand when trading spot markets

Starting with spot trading is a smart choice for those new to the cryptocurrency world. It is the simplest and most accessible form of trading: you just need to find a suitable buyer or seller, then complete the transaction instantly. To help you get started smoothly, we will introduce essential concepts and terminology that every trader needs to know.

Order Types: Market and Limit

When placing buy or sell orders for cryptocurrencies, you will encounter two main types of orders. Market orders allow you to buy or sell immediately at the current market price. This method is quick, but the price you receive may differ from your expectation.

Limit orders work differently — you specify a specific price at which you are willing to buy or sell. This order will only be executed when the market reaches that price. Although it may take longer, you will get your desired price.

Trading Pairs: Understanding the Basic Structure

In spot trading markets, all cryptocurrencies are traded in pairs. For example, BTC/USDT, ETH/USDT, or ADA/BTC. The reading is very simple: the first currency is the quote currency (BTC is the traded currency), and the second currency is the base currency (USDT used to set the price).

If you want to hold Bitcoin, you can use USDT to buy BTC — this is called a buy order. Conversely, selling BTC to receive USDT is called a sell order. This mechanism makes it easy to switch between digital assets.

Chart Tools: Essential Analysis Tools

The skill of reading charts is a key factor in making smart trading decisions. Charts display price movements over time, providing insights into market trends and potential price levels.

To master this skill, you should learn about elements such as candlesticks (candlestick), support and resistance levels, trend lines, as well as moving averages (MA). These tools will help you forecast price fluctuations and identify optimal entry/exit points.

Account Structure: From Funding Wallet to Trading Account

To trade spot, you need to understand how accounts operate. Funding wallet is where you store your digital assets that you deposit or purchase on the exchange. It’s like your personal wallet.

However, to start trading, you cannot directly use assets from the funding wallet. Instead, you need to transfer assets to the trading account. This is where buy and sell orders are actually executed. Some exchanges also offer growth accounts for other specific needs.

Conclusion

Spot trading is a great first step to explore the world of cryptocurrencies. Mastering these concepts will help you confidently navigate the market, from choosing the right order type to managing different spot trading pairs. Your learning journey will become easier as you understand each step and practice continuously.