Homework Task 3 professor @besticofinder spot trading.

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Thanks to @steemitblog for this great initiative for steemit users to learn interesting topics about crypto space after reading and participating in the class I will complete my homework task 3.

Explain Spot Trading and Margin Trading

I will start by writing about what spot trading is all about before writing on margin trading.

Spot trading.

Spot trading can be also referred to as spot transaction, in the crypto base exchange platform spot trading can be executed within seconds the speed of transaction can sometimes depend on a trader's open position.

It's also a spot transaction because the completion of buying and selling of a currency can be done at a spot that can be instantly done, depending on market volatility and trading open position by a trader.
In general term spot, trading is a process in which buying and selling of currency can be done within a certified exchange platform which includes foreign currencies, financial instruments, and commodities in the market.
Spot price is the current price at which a specified coin or token will be sold or bought in the market.

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Above is a screenshot of a spot training view of two crypto pair KCS/USDT
In the above spot trade, a trader can choose either to buy or sell KSC against USDT.
For the above transaction to be executed a trader must fund their trading account to be able to spot one currency for another.
reference

Margin trading

This type of trade includes having access to extra funds by traders or investors to have extra accessible funds in other to perform more flexible trading.
Margin trades is a process in which a trader can have access to borrow extra fund from an exchange broker to increase his trading securities or funds
In simple margin trading have to do with loan or collateral where the trader has to pay with interest.
it involves a trader borrowing money from a broker to carry out the trading activity.

Discuss the advantages and disadvantages of Spot Trading and Margin Trading

Spot trading advantage/disadvantage

Advantages

1. Transaction and execution of crypto pairs trading are done very fast and conveniently.

2. Spot trading in crypto base exchange has multiple pairs for traders to choose from and trade.

3. Little capital can be used to start spot trading.

Disadvantages

1. There can be high market volatility

2. prior and technical knowledge is needed

Margin trading advantage/disadvantage

1. Allow trader to have access to a loan

2. it increases trading activities with more security covered fund

Disadvantages

1. Interest rate might increase on borrowed fund

2. large amount of capital is need to create a margin account

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