If you’re considering getting into Crypto Spot Trading, you’ve come to the right place. This complete guide explains everything you need to know to become successful with this exciting new form of trading. Learn about Market orders, Limit orders, Order books, and the role of whales.
Table of Contents
In the crypto trade spot price charts are a valuable tool for monitoring price changes. An illustration of the rise and fall of a currency over time is shown on a price chart. For many day-trading enthusiasts, it is a helpful tool that enables them to monitor minute-by-minute price changes. It is important to note, however, that a price chart will not show you the liquidity level or the total volume.
While looking at a price chart, it’s essential to understand the various patterns and their meanings. For example, a ‘head and shoulders pattern indicates an upswing. Similarly, a ‘bearish wedge’ pattern indicates a downtrend.
Liquidity risk is a concern for any trader, whether using a traditional currency or crypto. The capacity to buy or sell an asset at a fair price is known as liquidity. Purchases with a high level of liquidity are the easiest to swap for cash, while those with lower levels are more difficult to exchange.
One of the most common risks for crypto spot trading is the inability to sell an asset at a price that enables a trader to make a profit. This type of risk results from the asset’s illiquidity and market inefficiency. This can result in high price fluctuations and substantial bid-ask spreads. The lack of liquidity also means longer wait times before you can sell at your desired price.
If you want to buy Bitcoin, you can place a market order. This type of order will allow you to set a price in advance to enter it into the market when the price reaches that value. You can also choose to use a limit order. A limit order only fulfills an order if the price is within a specific range.
The price of a crypto asset can rise or fall based on the market’s sentiment. This makes spot trading safer than margin trading, where you risk even more money. Also, spot trading does not force you to sell your tokens.
You can predetermine the price of a spot trade using a limit order. If the cost of the crypto you wish to purchase reaches your limit price, your order will be executed. For instance, you should set your limit order at $30,000 if you want to buy a bitcoin.
Limit orders are outstanding for holders and patient investors. However, they can result in missing out on a good trading opportunity. It’s also important to remember that a limit order is not a guarantee that your order will be filled quickly.
An order book is a document that contains information about pending buy and sells orders. These records give traders a better idea of the current price and market demand. They can also help determine price resistance levels. A giant cluster of buy orders or a large chunk of sell orders may indicate a support or resistance level.
You can place a limit order in which you want to buy a certain amount of a particular cryptocurrency. This order is not guaranteed to be filled. It can sit in the order book for months. However, you can cancel it before the auction takes place.
Manipulation By Whales
If you’re a crypto trader, you’ve likely heard of stories about market manipulation by whales or unethical market makers. They often manipulate prices by using methods such as hidden orders and spoofing to artificially lower the price of a particular coin. Tracking them can be challenging, but retail traders can use various strategies to circumvent them.
Unlike the ominous actions of a single person, the whales tend to act in shoals. They accumulate their wealth slowly and distribute orders across the entire market. This way, they can’t be detected. This practice is also prohibited in most regulated markets.