When it comes to digital assets, cash trading is one of the most basic types of trading and investment mechanism for any typical trader. We will walk through the basics of cash trading and review some of the key terms to know when engaging in cash trading.
Cash trading involves purchasing an asset such as Bitcoin and holding it until its value increases or using it to buy other altcoins that traders believe may rise in value. In the Bitcoin spot market, traders buy and sell Bitcoin and their trades are settled instantly. In simple terms, it is the underlying market where bitcoins are exchanged.
Key Terms:
Trading pair: A trading pair consists of two assets where traders can exchange one asset for the other and vice versa. An example is the BTC/USD trading pair. The first asset listed is called the base currency, while the second asset is called the quote currency.
Order Book: An order book is where traders can view the current bids and offers that are available to buy or sell an asset. In the digital asset market, order books are updated constantly. This means that investors can execute a trade on an order book at any time.
Bid Price: The bid prices are orders that are looking to buy the base currency. When evaluating the BTC/USDtrading pair, since Bitcoin is the base currency, that means bid prices will be the offers to buy Bitcoin.
Ask Price: The asking prices are orders that are looking to sell the base currency. Therefore, when someone is trying to sell Bitcoin on the BTC/USD trading pair, the sell offers are referred to as asking prices.
Spread: The market spread is the gap between the highest bid offer and the lowest ask offer on the order book. The gap is essentially the difference between the price at which people are willing to sell an asset and the price that other people are willing to buy an asset.
Cash trading markets are relatively simple to engage with and trade on AscendEX. Users can get started HERE.
