Trading glossary
Understand spot trading, how it differs from derivatives, and why immediate settlement and direct ownership define this common way of trading assets.
Spot trading is the exchange of an asset for immediate settlement at the prevailing market price, known as the spot price. When you buy in the spot market, you take direct ownership of the asset itself rather than a contract that tracks it. Settlement is effectively immediate, and you hold the actual coin, token, or share until you decide to sell it.
Spot trading contrasts with derivatives such as futures, where you trade a contract whose value is derived from an underlying asset rather than the asset itself. Spot positions do not use leverage by default, are not subject to funding rates, and cannot be liquidated by a margin mechanism. This makes spot a more straightforward way to gain exposure to an asset's price.
Because you own the asset outright, your outcome is tied directly to its price movement, with no expiry or contract mechanics to manage. Spot markets still carry full price risk, and values can fall as well as rise. This overview is educational and not personalized financial advice; consider your own circumstances and the risk of losing capital before trading any asset.
In spot trading you buy the actual asset for immediate delivery. In futures you trade a contract that derives its value from the asset, often with leverage, expiry, or funding mechanics that spot does not have.
By default, no. Spot trades are typically funded with your own capital, so there is no borrowed money and no liquidation from a margin mechanism, though price risk remains.