Spot Trading Basics
Spot trading is the simplest form of crypto trading - you buy crypto at current prices and own it immediately. No leverage, no complexity, no extra risk.
Understanding Trading Pairs
In crypto, you always trade one asset for another. This is shown as a "trading pair."
How to Read Trading Pairs:
- BTC/USDT = Buy Bitcoin with USDT (or sell BTC for USDT)
- ETH/BTC = Buy Ethereum with Bitcoin (or sell ETH for BTC)
- SOL/USDC = Buy Solana with USDC (or sell SOL for USDC)
BASE/QUOTE
- Base = what you're buying/selling
- Quote = what you're paying with
- Price shown = how much quote for 1 base
BTC/USDT at $50,000 = 1 BTC costs 50,000 USDT
Common Quote Currencies:
| Currency | Type | Best For |
|---|---|---|
| USDT | Stablecoin | Most trading pairs, stable pricing |
| USDC | Stablecoin | More regulated, US focused |
| BTC | Crypto | Trading altcoins against Bitcoin |
| ETH | Crypto | DeFi tokens, NFT trading |
Order Types Explained
Market Order
Buy/sell immediately at the best available price.
- Pros: Fast, guaranteed to execute
- Cons: May get worse price if market is moving fast
- Best for: Small trades, urgent situations
Limit Order
Set your desired price. Order fills only when market reaches that price.
- Pros: Get exact price you want, lower fees usually
- Cons: May never fill if price doesn't reach your target
- Best for: Patient traders, larger trades
Maker = Your limit order adds liquidity (lower fees)
Taker = Market orders remove liquidity (higher fees)
Using limit orders can save you 50% on fees!
Stop-Loss Order
Automatically sell if price drops to a certain level. Limits your losses.
- Set below your entry price
- Protects against big drops
- Essential for risk management
Placing Your First Trade
Here's how to buy crypto on an exchange (general steps):
To Buy (Example: Buying ETH with USDT):
- Deposit USDT to your exchange account
- Navigate to ETH/USDT trading pair
- Click "Buy" tab
- Choose order type (Market or Limit)
- Enter amount you want to spend or receive
- Review fees and total
- Click "Buy ETH"
- Confirm the order
To Sell:
- Same process, but click "Sell" tab
- Enter amount of crypto to sell
- You'll receive USDT (or other quote currency)
Always verify:
- Correct trading pair
- Right direction (buy vs sell)
- Amount is correct
- Fees make sense
One wrong click can be costly!
Basic Trading Strategies
DCA (Dollar-Cost Averaging)
Invest a fixed amount at regular intervals, regardless of price.
- Example: Buy $100 of BTC every week
- Reduces impact of volatility
- Best for long-term investors
- No need to time the market
Buy the Dip
Buy when prices drop significantly from recent highs.
- Wait for 10-30% corrections
- Only in uptrends or for long-term holds
- Risk: "dip" might keep dipping
HODL
Buy and hold for the long term, ignoring short-term volatility.
- Simplest strategy
- Historically profitable for BTC, ETH
- Less stress than active trading
- FOMO buying - Don't buy just because price is pumping
- Panic selling - Don't sell just because price is dropping
- Over-trading - Fees add up, most traders lose money
- Leverage trading - As a beginner, avoid it completely
Most successful long-term investors just buy Bitcoin and Ethereum with DCA, then HODL. No fancy trading needed. Simplicity often beats complexity.