SINGAPORE – Cryptocurrency trading has come a long way, the users today can find so many exchanges with various trading products. But overall, the trading landscape can be divided into two major parts: spot trading which is buying or selling the actual cryptocurrencies and profit from the actual price change, and derivative trading which essentially is buying or selling contracts of the cryptocurrencies and profit from the predictions of the price change.
Crypto trading industry initially mainly entailed spot trading, it was from 2018 that derivative trading began to catch up. But up to 2020, the market volume of derivative trading has become identical to that of spot trading and later even exceeded it.
MoonXBT, the innovative social trading platform, starts out focusing on derivatives trading, to be more specific, on futures. Copy trading, MoonXBT’s major social trading function, which allows investors to follow the strategies of professional traders and have their orders automatically executed are also mainly applied to futures. It seems MoonXBT favours the high leveraged derivatives trading more. But now, after three quarters since its founding, the exchange is launching spot trading this May .
“MoonXBT is definitely seeing strong rising demands from new markets, not just in terms of geographic markets but also new projects in the development of its ecosystem”, the COO of MoonXBT, George Lee says. According to George, the needs for spot trading from not only the professional traders but also the rookie users in emerging markets and the fact that MoonXBT is gradually developing its ecosystem which inevitably needs spot trading given the token economics of new projects are the two major reasons behind the move to launch spot trading now on MoonXBT.
Spot trading v.s. Derivative trading
To have a better understanding, it’s important to unfold the differences between spot trading and derivative trading from multiple dimensions.
First of all, as mentioned earlier, spot trading and derivative trading are different in terms of the trading subjects. With spot trading, investors are buying and selling the actual trading subjects. Whereas with derivative trading, investors are buying the contracts specifying to trade a subject at a set price in a set time in the future.
Relatively, how much trading funds are needed and how much profit can be made are different. With spot trading, investors have to have funds equivalent to the amount of the trading subject they are buying, and the profit they can make are based on how much capital they have invested as well as the price change of the trading subjects. But with derivative trading, investors only need to deposit a portion of margin, and the profit they can make has little to do with margin. The profit of derivative trading is decided by the price prediction and how much leverage investors use. Simply put, derivative trading makes it possible for people to use small amounts of money to make big profits with high leverage.
High returns come with high risks. Compared to spot trading, the price fluctuations are amplified with leverages in derivative trading. That is to say, derivative traders will experience more drastic change in earnings and losses than spot traders. Also, it’s possible that derivative investors can lose all the margin due to price fluctuation, but it’s unlikely for spot investor’s positions to become zero as long as they have patience to wait for price to come back.
It can be seen that spot trading may be more suitable for rookie traders with less trading knowledge and sense of the market and with relatively low tolerance of fluctuations and risk.
On the other hand, derivative trading requires more trading knowledge and the ability to manage risks.
More trading products for new users
With the strong international team and broad market span, MoonXBT has been welcoming more and more new users from multiple parts of the world: Vietnam, Indonesia, Malaysia, Turkey, Russia, Latin America and so forth. It has even become the No. 3 crypto exchange in Vietnam. In addition, MoonXBT’s transparency, liquidity and social trading features have attracted a hybrid of users with both spot trading investors and derivative lovers.
To better serve the different investment demands of new users in the expanding markets, spot trading is launched as a supplement to derivative trading. Even for users who are more interested in derivative trading, especially those who are just getting started in crypto trading at large, it’s better to have spot trading as a transition zone so that users can get better sense of the fast changing crypto market before diving into the more risk-driven derivative trading market.
More possibilities of new projects
With a growing user base and interconnectivity, MoonXBT also plans to incubate and launch new projects of gamefi and DAO in the upcoming quarters. It is very likely that these new products will integrate gamefi, defi, socialfi and diverse community incentives to form the token economies. And spot trading is essential for the token economies of the new projects and the future eco-system of MoonXBT.
MoonXBT spot trading advantages
Last but not the least, spot trading on MoonXBT will have several advantages. First all, MoonXBT has been offering consistent transparent and secure trading services. It has earned credibility in its derivative trading service and will extend the quality services to spot trading.
More importantly, the platform offers abundant liquidity to deliver good trading depth. Orders on the platform can be filled in milliseconds to avoid price slippage which is also important in spot trading.
MoonXBT offers a very friendly user interface making it easy to buy cryptocurrencies and it has built a vibrant crypto community with its social features such as forums and trading battles from which spot traders can also get benefits.
The spot trading of MoonXBT now supports stable coin of USDT, USDC, and cryptocurrencies of the following: BTC、ETH、DOGE、SHIB、BNB、SOL、MATIC、LUNA、AVAX