What Is Pre-Market Spot Trading?
Pre-Market Spot Trading is an over-the-counter (OTC) service that enables users to trade new tokens before they are officially listed on an exchange. This system allows buyers and sellers to set custom quotes and execute trades at mutually agreed prices, providing an opportunity to transact ahead of the public listing.
This method of trading is particularly useful for those looking to gain early exposure to new digital assets or to hedge against potential price volatility post-listing.
How Does Pre-Market Spot Trading Work?
In Pre-Market Spot Trading, all transactions are denominated in USDT. Users can create orders to buy or sell a specific token before its official release. The process involves two primary roles: buyers and sellers.
For Buyers
When you place a buy order, you pay the order value along with a transaction fee. Once your order matches with a seller, the system holds the payment until the settlement time. If the seller delivers the tokens as agreed, you receive them in your account. If the seller fails to deliver, you receive a refund of your payment plus 90% of the seller’s collateral as compensation.
For Sellers
As a seller, you place a sell order by paying a transaction fee and providing collateral based on a predefined pledge rate. You must have the tokens ready in your Unified Trading Account by the settlement time. Successful delivery results in you receiving the payment. Failure to deliver means you lose the collateral amount for that order.
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Key Concepts in Pre-Market Trading
Price Determination
Prices in pre-market trades are set entirely by buyers and sellers through their quoted prices. These quotes may differ significantly from the token’s price after official listing.
Last Traded Price Change
The Last Traded Price Change is calculated as:
(Current Transaction Price – Previous Transaction Price) / Previous Transaction Price.
This metric helps traders gauge recent price movements and market sentiment.
Enable Partial Fill
Enabling Partial Fill allows orders to be executed in parts. For example, a buy order might be fulfilled by multiple sellers. If one seller fails to deliver, only that portion is affected, while the rest of the order may still be settled.
Full vs. Partial Order Types
- A Full Order requires the entire order quantity to be matched at the specified price.
- A Partial Order allows traders to buy or sell a portion of the total order by specifying their preferred investment amount.
Advantages of Pre-Market Spot Trading
Pre-Market Spot Trading offers several benefits:
- Early access to new tokens before public listing.
- Potential for better entry prices compared to post-listing rates.
- Flexibility in setting custom buy/sell quotes.
- Opportunity to capitalize on pre-listing hype and market momentum.
Common Delivery Scenarios
For Sellers
Sellers must ensure they have sufficient tokens in their Unified Trading Account by the settlement time. Tokens can be obtained through:
- Depositing from an external wallet.
- Purchasing tokens from the spot market after listing but before settlement.
Partial Delivery
Partial delivery is possible. The system uses a FIFO (First In, First Out) method to settle sub-orders. If a seller’s balance is insufficient to fulfill all matched orders, earlier matches are prioritized, and later ones may fail.
Pre-Settlement Delivery
Delivery occurs only at the official settlement time. Even if tokens are prepared earlier, early delivery is not supported.
Risks Involved
All trading involves risk, and Pre-Market Spot Trading is no exception.
- Sellers risk losing collateral if they fail to deliver tokens on time.
- Buyers may face partial or failed deliveries but are compensated with collateral forfeited by the seller.
- There is no guarantee that a token traded in the pre-market will eventually be listed on the spot market.
Fees and Collateral
Transaction Fees
A transaction fee is applied to the total order value. The rate varies by token and is displayed on the Pre-Market Spot trading page. Canceled orders are not charged, but fees are non-refundable once an order is matched.
Collateral and Pledge Rate
Sellers must provide collateral based on a pledge rate, which is determined by factors such as token risk and volatility. The exact rate is visible when placing an order.
Failure to Deliver
If a seller fails to deliver, they lose 100% of their collateral. Of this, 90% is compensated to the buyer, and 10% is retained by the platform as a fee.
Liquidity and Market Participation
Liquidity in Pre-Market Spot Trading relies on active participation from buyers and sellers. As an OTC market, liquidity is maintained through advance quoting and order matching, which helps stabilize prices.
Additional Considerations
Leverage Usage
Leverage is not supported in Pre-Market Spot Trading. Traders must use their own funds for both buying and selling.
Token Listing Delays
If a token’s listing is delayed, pre-market orders remain valid. A new settlement time will be communicated via email and platform notifications.
Order Cancellation
Orders cannot be canceled after they are matched. For partially filled orders, only the unmatched portion can be canceled.
Impact on Listing Price
Pre-market trading reflects market expectations but does not directly determine the official listing price, which is influenced by broader market factors.
Frequently Asked Questions
What happens if a seller does not deliver tokens?
If a seller fails to deliver, the buyer receives a full refund plus 90% of the seller’s collateral as compensation. The seller loses their entire collateral.
Can I cancel a pre-market order after it is matched?
No, once an order is matched, it cannot be canceled. Only unmatched portions of partially filled orders can be canceled.
How is the collateral amount determined?
The collateral amount is based on a pledge rate, which considers the token’s risk and volatility. The rate is displayed when you place an order.
Is pre-market trading available for all new tokens?
Not all new tokens support pre-market trading. Availability depends on the exchange and the token’s listing policy.
What is the settlement time for pre-market trades?
Settlement time is predefined and aligned with the token’s official listing schedule. You can check the exact time in your order history.
Can I use leverage in pre-market trading?
No, pre-market spot trading does not support leverage. All trades must be made with full collateral or payment.
Pre-Market Spot Trading offers a unique way to engage with new tokens ahead of their official listing. By understanding the mechanics, risks, and opportunities, you can make more informed decisions and potentially capitalize on early market movements.