Spot trading involves directly purchasing or selling financial instruments and assets such as cryptocurrencies, forex, stocks, or bonds. Delivery of the asset is often immediate. Spot trading occurs in spot markets, which are either exchange-based or over-the-counter (directly between traders). When trading on spot markets, you can only use assets you own – there is no leverage or margin.
Centralized exchanges for spot trading manage regulatory compliance, security, custody, and other factors to make trading easier. In return, exchanges take transaction fees. Decentralized exchanges provide a similar service but through blockchain smart contracts.