A Must-Read for Newbies in Spot Trading: An Article to Understand the Most Basic Trading Method in the Crypto World

In the crypto world, spot trading is the most straightforward operation — you find a coin you like, buy it directly with money, and it's instantly yours, without any flashy leverage. This is also the first trade for most newbies.

What is the Spot Market

The spot market is a place for real-time trading and immediate delivery. You pay, the other party delivers the asset, and the whole process is smooth and direct. That's also why it's called “spot” — live in the moment, don't wait for the future.

Mainstream coins like BTC and ETH can be traded on the Spot, and traditional financial stocks (NASDAQ, New York Stock Exchange) are also part of the Spot market.

How to play spot trading

The core logic is very simple:

• Buy low → Wait for the price to rise → Sell high → Earn the difference
• Or short (sell first and buy later), betting on the coin price to drop

With a market order, you can immediately trade at the best price, but the cost is you might not be able to buy the full amount. For example, if you want to buy 10 ETH, but the seller only has 3, the remaining 7 will have to be traded at a higher price - this is called slippage.

Two Trading Methods

Centralized Exchange (CEX)

Exchanges like Binance and OKX help you match orders and safeguard assets. The benefits are safety and stability, customer service, and KYC regulation. The downside is that you have to pay fees, and you need to trust them.

Decentralized Exchange (DEX) + OTC

• DEX (Uniswap, PancakeSwap): Direct wallet connection, automatic transactions via smart contracts, no account creation required, stronger privacy. But if something goes wrong, no one will help you.
• OTC (Over-the-Counter Trading): Directly negotiate prices with the counterparty, suitable for large orders. Want to buy 100 BTC without crashing the market? OTC is your friend.

Spot vs Contract: What's the Difference?

Spot vs Margin Trading: Don't Get Confused

Spot is buying with your own money. Margin trading is borrowing money to leverage, for example, if you have 1000U, you can borrow 5000U to trade — when making a profit, the gains are doubled, but when losing, the losses are also doubled. So the risk is much greater.

How to operate on an exchange like Gate

Taking spot trading as an example, the process is:

1. Enter the spot trading page
2. Choose trading pair (for example BTC/USDT)
3. Place order: Enter the quantity and price you want to buy.
4. Transaction → Coin Arrival

The simplest is a market order - enter how much you want to spend, and the system will execute the transaction at the best price.

Real Advantages and Disadvantages of Spot Trading

Advantages

✅ Transparent and Simple —— The price is determined by supply and demand, without complex funding rates and liquidation mechanisms.

✅ No need to worry about liquidation —— As long as it's not zeroed out, you can hold or sell at any time.

✅ Rules are straightforward —— It is clear at a glance how much to spend on what, making it easy to calculate risks.

disadvantage

❌ Holding Coin Risk —— You must keep your private key safe, the security responsibility is on yourself.

❌ Limited Returns —— No leverage, you can only earn 1x even in a 10x market.

❌ Suitable for long-term, not for short-term arbitrage —— The transaction fees will eat away a lot of the profits from day trading.

Advice for Newbies on Spot Trading

Spot trading is the most beginner-friendly way to enter the crypto world, with no liquidation risk and not many tricks. But don't think that simplicity means you can make money — you still need to learn technical analysis, fundamental analysis, and sentiment cycle judgment.

In summary: first build a foundation with spot trading, and when you truly understand the market, then consider using contract leverage.