Entering the world of cryptocurrency can feel overwhelming, especially when faced with a complex exchange interface for the first time. This guide will walk you through the most fundamental way to trade on Binance: spot trading. The process is broken down into three simple steps: funding your account, buying, and selling.
As the world's largest cryptocurrency exchange by user base and trading volume, Binance supports hundreds of digital assets. It offers a full suite of services, from basic spot and margin trading to advanced futures contracts. Users can also explore earning opportunities through crypto savings accounts, staking, pooling, and DeFi liquidity mining, making it a versatile platform for all types of investors.
Understanding Spot Trading
Spot trading is the simplest and most foundational method for trading assets. You are likely already familiar with the concept, as spot markets exist for various asset classes, including cryptocurrencies, stocks, commodities, forex, and bonds. Famous markets like NASDAQ and the NYSE are examples of spot markets.
In a typical spot trade, a buyer aims to profit by purchasing an asset and holding it, hoping its value increases. Once the price rises, they can sell the asset on the spot market for a profit. Conversely, traders can also short the market by borrowing an asset, selling it, and then repurchasing it at a lower price to return it, pocketing the difference.
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How to Perform a Spot Trade
For newcomers, the trading dashboard can be confusing. This section will guide you through the entire spot trading process on Binance in three clear steps.
- Funding Your Account: You must deposit funds into your account before you can start trading.
- Buying Crypto: Purchasing a digital asset (like Bitcoin or Ethereum) at your chosen price.
- Selling Crypto: Selling your held digital assets at a specified price.
Step-by-Step Trading Process
Step 1: Funding Your Account (Depositing Crypto)
The first step is to deposit funds. For this guide, we will focus on depositing cryptocurrency, a common and low-fee method.
- Log in to the Binance website and click on "Wallet" in the top right corner, then select "Spot Wallet."
- Inside your Spot Wallet, click on "Deposit."
- You will be redirected to the cryptocurrency deposit screen. Select the currency you wish to deposit. For this example, we will use USDT.
- Choose the corresponding deposit network. It is crucial to select the correct network to avoid losing funds. For low fees, TRX (TRC20) is a popular choice.
- Copy the unique deposit address provided.
Important Notes:
- Only send USDT to this deposit address.
- Ensure you select the TRC20 network on both Binance and the platform you are sending from.
- Transaction times and fees vary by network.
After completing a deposit, you are ready to buy and sell. Before executing a trade, familiarize yourself with the key areas of the trading interface for better decision-making.
Step 2: Buying Cryptocurrency
Once your account is funded, navigate to the trading interface. Click on "Markets" and select any trading pair to enter the "Advanced Trading" page.
This interface includes a price chart, an order book showing current buy and sell orders, and your trade history. Ensure your funds are in your "Spot Wallet." If you used a credit card to buy crypto, you may need to transfer the funds from your "Funding Wallet" to your "Spot Wallet" before trading.
Selecting a Trading Pair:
Let's assume you deposited USDT and want to buy Ethereum (ETH). Search for the ETH/USDT trading pair. Be careful not to select leveraged tokens like ETHDOWN or ETHUP, as these are complex products different from spot trading.
How to Place a Limit Buy Order
A common misconception is that you must buy whole coins. In crypto, assets are highly divisible, allowing you to purchase fractional amounts. A limit order lets you set the exact price you want to buy at.
Example:
You believe ETH will dip to $3,370 before rising and want to buy at that price.
- In the trading interface for ETH/USDT, select "Limit" order.
- Enter your desired buy price (e.g., 3370).
- Enter the amount of USDT you want to spend (e.g., 125 USDT). The interface will show how much ETH you will receive.
- Place the order.
Your order will appear in the "Open Orders" section. It will only be filled if the market price reaches your specified limit price. This method provides price certainty but does not guarantee immediate execution.
How to Place a Market Buy Order
Use a market order if you want to buy immediately at the current best available market price. This is useful when you are confident in a trend and need to enter a position quickly.
Example:
You have 500 USDT and want to use half to buy ETH now.
- Select "Market" order.
- In the "Amount" field, you can specify how much you want to buy. Alternatively, click "50%" to use half of your available USDT (250 USDT).
- Place the order.
The order will execute instantly at the prevailing market price. You can find the details, including the exact execution price and quantity, in your "Order History."
Step 3: Selling Cryptocurrency
The goal of buying is typically to sell later at a higher price for a profit. You can sell using either limit or market orders, depending on your strategy.
Let's assume you hold 0.0744 ETH and want to sell it.
How to Place a Limit Sell Order
You plan to sell all your ETH if the price reaches $3,500.
- Switch to the "Sell" tab and select "Limit" order.
- Enter your target sell price (e.g., 3500).
- For quantity, select "100%" to sell your entire holding.
- Place the order.
This sell order will appear in your "Open Orders" and will only execute if the market price rises to meet your limit price.
How to Place a Market Sell Order
A market sell is used when you need to exit a position quickly, often to cut losses during a sharp price drop or to take profits without waiting.
Example:
You anticipate a major price drop and want to sell your ETH immediately.
- Select "Market" order in the "Sell" tab.
- Choose the percentage of your holding to sell (e.g., 100%).
- Place the order.
The order will execute instantly at the best available bid price. Check your "Order History" for the confirmed details of the sale.
Frequently Asked Questions
What is the main difference between a limit order and a market order?
A limit order allows you to set a specific price to buy or sell an asset. The trade only executes if the market reaches that price. A market order executes immediately at the current best available market price, prioritizing speed over price certainty.
Is spot trading safe for beginners?
Yes, spot trading is considered the most straightforward and least risky form of trading on an exchange. You are directly buying and selling the actual assets without using leverage, which means you can't lose more than your initial investment from market moves.
What are the trading fees on Binance?
Binance uses a maker-taker fee model. Fees are generally very low and can be reduced further by holding Binance's native token (BNB) to pay for fees or by achieving a higher 30-day trading volume tier.
Why didn't my limit order get filled?
A limit order requires the market price to reach your specified price to execute. If the price never hits your target, the order will remain open until you cancel it or the condition is met. This is different from a market order, which is designed to fill immediately.
Can I buy any cryptocurrency with spot trading?
You can buy any cryptocurrency listed on the Binance spot market. However, you can only purchase it with a currency it is paired with. For example, to buy Bitcoin with US Dollars, you would need to use a BTC/USD trading pair.
Summary
Mastering spot trading on Binance involves three core actions: funding your account, buying, and selling. You can fund your account via various methods, including bank transfer, credit card, or crypto deposit.
When buying, you can choose between limit and market orders. Limit orders give you control over your entry price but require patience, while market orders offer immediate execution. The same principles apply to selling, where you can set profit targets with limit orders or exit quickly with market orders.
Understanding these fundamental order types is crucial. They allow you to enter positions at favorable prices and help you manage risk by enabling swift action to secure profits or limit losses, forming the foundation of any solid trading strategy.