Spot Trading

Spot trading takes place in the spot market. Spot market is a place where exchange/transactions are made instantly. It is a place where buyers and sellers settle a trade instantly, and as well bid a price. The price is called spot price or current price.

In spot trading, transactions are made in the sense that you must have in your account balance an amount that is equal to the bidding or asking price at the time or date of settlement or delivery for the order to execute.
Eg. If you want to buy an asset worth of $50, you must have an account balance above or equal to $50 at the time/date of settlement.

If your account balance is below the bidding/asking price at the date of settlement, the order will not be executed instantly rather it will remain in the order book and the transaction exchange will not allow you into such position again.

Advantages of spot trading

For new beginners, it helps them to manage risk as they are only trading with the balance they have, so that they will not end up losing anything more than they already have in their account.

Spot trading is done electronically and instantly with the help of order book. Trading is done more conveniently from the comfort of our homes.
it is an accurate system of trading which is transparent and as well regulated, there is no fear of illegal transaction.

Disadvantages of spot trading

You must maintain an account balance in your account and that restricted you from investing in other trading opportunities even if you have strong conviction about such trade.
you are not open to other trading opportunities

Margin Trading

Margin trading is different from spot trading. The trading is done by borrowing funds from a third party. Unlike spot trading that you must have a balance equal to the bidding price, margin trading does not require you to keep a balance equal to the bidding price but will have at least 1% leverage of the asset in other to keep the position open.

In this trading, you can withdraw the profit or go into more position depending on how you trade.

Advantages of margin trading

The main benefit of this margin trading is that you can withdraw your profit and as well reinvest the profit for more returns.
You can also trade much investment with these option and explore more trading opportunities and earn good returns depending on your trading style.

Disadvantages of margin trading

It involves a lot of risk, unlike spot trading that you can lose only the capital you have but if you involve in many positions, you are likely going to lose all you invested if you are not careful.
If you do not have enough margin to support your loses on time, your position is likely to be liquidated.