Crypto Academy Week 3 Homework Post for Professor @besticofinder
Hello everyone.
In this Post, I am here to present my homework task-3 which is given by Professor @besticofinder.
So, Let's begin.
In this Post, I will tell about Spot Trading and Margin Trading.
What Is Spot Trading
A spot trade, also known as a spot transaction, refers to the purchase or sale of a foreign currency, financial instrument, or commodity for instant delivery on a specified spot date. ...
In a foreign exchange spot trade, the exchange rate on which the transaction is based is referred to as the spot exchange rate.
Benefits Of Spot Trading
- A lot of benefits can be availed by both the buyer and the seller.
- The negotiation between both parties is competitive as large numbers of buyers start the price war and hence offer the best price to both the buyers and sellers.
- It is an accurate system that is transparent and regulated. The fear of illegal transactions can be avoided.
- The items are handled and stored in good condition; hence the buyers can expect standard quality.
- Arbitrage prospect is open.
- Technological advancement enables quicker transactions.
Disadvantages of Spot Markets
- The spot market is not flexible in terms of timing, as parties will have to handle physical delivery on the spot.
- The interest rate spot market is affected by counterparty default risk.
- Currency trading in spot markets is prone to counterparty risk due to the solvency of the market maker.
what is margin Trading?
Margin trading is a method of trading assets using funds provided by a third party.
When compared to regular trading accounts, margin accounts allow traders to access greater sums of capital, allowing them to leverage their positions.
The profit margin is very large today.
Advantages/Benefits of margin trade
- Using a margin account, you can use the securities in your account as collateral for a loan to pay the cost of exercising your options.
- This enables you to avoid selling securities and incurring a taxable capital gain or using up all of your available cash.
Disadvantages/ Loss of margin trade
- Increased risk
- This is the most obvious disadvantage of trading with margin.
- To be able to control a much larger position than usual means not only that the profits can bigger but also your losses.
- This is why you must be careful and stick to very strict risk exposure and money management rules when using margin.
Hello @abdulqayyum95857 ,
Your article is with plagiarism. Please only submit original content done by yourself [0]
Okay Dear Professor Thanks