Spot Market
A market where assets are bought and sold for immediate delivery and full ownership.
Also called: spot · spot trading
Written by Javier Sánchez Ros
In plain language
Spot trading means you buy the actual asset with your own capital and hold it. There is no borrowing, no financing and no expiry.
Because there is no leverage, there is no liquidation. The worst case is that the asset goes to zero, and you cannot lose more than you put in.
This is the simplest form of exposure, and it is the appropriate default for anyone who has not yet demonstrated consistent risk control.
Worked through
$2,000 of bitcoin bought outright at $60,000
- Capital committed
- $2,000
- Bitcoin held
- 0.0333 BTC
- Liquidation price
- none
- Worst possible outcome
- −$2,000
There is no liquidation price on this position, and there is no way to lose more than the $2,000. Bitcoin could fall 70% overnight and the coins would still be there in the morning, worth $600. Nothing forces the position closed.
That is a genuine and underrated advantage, and it is also where the thinking usually stops. A 70% fall is still a 70% fall. Spot protects you from being removed from the trade; it does not protect you from the trade being wrong, and bitcoin has drawn down more than 70% from a high more than once.
So the sizing question does not disappear, it changes shape. Instead of "where do I get liquidated", it becomes "how much of this can I watch fall by three quarters without selling at the bottom". For most people that number is smaller than the one they first type in.
Why it matters
Spot removes the two ways derivatives traders most often fail — forced liquidation and financing costs — leaving only the price risk you chose.
Common mistakes
- Assuming spot means safe. A 60% drawdown is entirely possible without any leverage.
- Sizing a spot position with no stop simply because liquidation is impossible.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A leveraged derivative contract that tracks an asset’s price with no expiration date.
The price at which a leveraged position is forcibly closed because margin is exhausted.
The amount of an asset you buy or sell in a single trade.
The cost paid to a blockchain network to process a transaction.
Holding crypto assets offline, away from exchanges and internet-connected systems.