🎓
Scallop Learn
  • Guides
    • Welcome to Scallop Learn
    • Crypto
      • Basics
        • Don't Feel the FOMO - Crypto Slangs Explained
        • Blockchain: What is it?
        • What is an Exchange?
        • What are Stablecoins?
        • What is the Metaverse?
        • What are NFTs?
        • History of Bitcoin
        • What is Binance Smart Chain?
        • What is an IDO?
        • What is Staking?
        • Token Burning
        • Debunking Crypto Myths
        • The Crypto Dictionary
        • What is DYOR?
        • What is a Neo-bank?
        • Proof of Work vs Proof of Stake
        • Exploring Crypto Communities: How to Join and Connect with Like-Minded Enthusiasts
        • What is a DAO?
      • Intermediate
        • Scallop Chain Faucet: All you need to know!
        • Layer 2
        • Liquidity Pools
        • ETH 2.0 - The Merge
        • Centralised Exchanges VS Decentralised Exchanges
        • Web 3.0
        • Regulation
        • REIT's on the blockchain
        • The Future of Business Payments: How Crypto Payment Partners are Leading the Way
        • What Is A Crypto Card? How Does It Work?
        • Blockchain and AI
        • Why are regulations essential in Crypto Market? How does Scallop lead the way?
        • Banking on Blockchain
        • E-money Tokens
        • The Power Surge of Cross-Chain Interoperability in Blockchain's Future
        • Crypto Trading 101: Must know candlestick patterns for a successful trade
        • Exploring blockchain innovations and their real-world breakthroughs
        • Do not miss these common indicators of the crypto bull market
        • Decoding the Dynamics of Permissioned Blockchain Consensus Mechanisms
        • Summary
      • Advanced
        • Can Quantum Computers be a potential threat to Crypto?
        • Unlocking the cryptocurrency potential: How Banks can thrive in the digital age?
        • How do privacy-enhancing technologies ensure anonymity on the blockchain?
        • What Does Fintech Mean? Understanding the Intersection of Finance and Technology
          • Decoding Data Tokenisation: Its Vital Role and Relevance
        • Unravelling the Concept of the Time Value of Money: Its Implications and Applications
        • Unlocking the Potential of Real-World Assets
        • What is Byzantine fault tolerance?
        • Global Crypto Adoption and Its Potential Socio-Economic Impact
        • How ZK-Rollups are Supercharging Blockchain Transactions?
    • Security
      • Skimming of Credit and Debit Cards: What You Need to Know
      • How Blockchain Security Can Keep Your Crypto Safe?
      • Keeping Your Account Safe
      • Money muling scams: What are they and how can you avoid them?
      • Beware of these common frauds while using payment cards
    • Tutorials
      • Scallop App
      • Scallop Ramp
    • Markets
      • How are cryptocurrencies taxed across the globe?
      • What Can You Do On An Exchange?
      • Avoid FOMO To Plan A Recovery: 5 Things To Do In A Crypto Bear Market
      • Inflation
      • Meme Coins vs Altcoins
      • The Basics Of Investing
      • The Ripple Effect
      • Central Bank Digital Currencies: A Global Revolution and Impact
    • Know Your Crypto
      • Bitcoin
      • Ethereum
      • Binance Coin
      • Cardano
      • Optimism
      • Ripple
      • Solana
      • USD Coin
      • Polygon
      • Tron
      • Avalanche
      • Tether
    • Defi
      • Defi Introduction
      • Borrowing and Lending: Aave
      • Borrowing and Lending: Compound
      • Tokenisation
      • Defi projects: Terra
      • Wrapped Bitcoin
      • Summary
      • A Practical Guide: The Defi Walkthrough
      • Summary
  • Scallop
    • What is Scallop?
    • Products
      • Scallop Banking
        • Tips And Tricks For Getting The Most Out Of The Scallop App
      • Scallop Exchange
        • Getting started on Scallop Exchange
        • Trading Futures
        • Trading with Margin
        • Buying Ethereum on Scallop Exchange
      • Scallop Chain
        • Tech
          • Scallop Bridge Contracts
          • Configurations
          • Relayers
          • Launch Your Dapp on Scallop
          • Developing and Deploying Contracts​
          • Scallop Explorer​
          • Scallop Faucet​
          • Contract Verification​(Under Development)
          • Contract Security Checks​
          • Scallop Whitelist
        • Scallop Chain: Built on Cosmos and Secured by Biometric Bridge
        • E-Money Tokens and Scallop
      • Scallop Business
    • Getting Started
      • Getting Started: Fiat Onboarding And Exchanges
      • Getting Started: The Defi Walkthrough
      • Getting started: Scallop Exchange
      • Staking
        • Scallop Staking Guide
          • Useful Resources
          • 1. Setting Up Metamask Wallet
          • 2. Importing existing wallet
          • 3. Installing Binance Smart Chain
          • 4. Setting up a Kucoin Account
          • 5. Buying SCLP with a market order on Kucoin
          • 6. Transferring from Kucoin to Metamask
          • 7. Connecting Metamask to the SCLP Staking platform
        • LP Staking Guide
  • Announcements
  • News
    • News: Terra Collapse
    • Terra: Beyond Hope
    • News: Chapter 11 for Celsius
    • News: Nomad Bridge Hack
  • Extras
    • Task Lists
    • Tokenising Real Estate
    • How to Donate Crypto to Ukraine
Powered by GitBook
On this page
  • Order Books
  • Margin trading
  • Fractional Shares
  • Fractional NFT trading
  • Derivatives (Futures and Options)
  • Conclusion
  1. Guides
  2. Markets

What Can You Do On An Exchange?

A guide to the different functions of a regular crypto exchange

PreviousHow are cryptocurrencies taxed across the globe?NextAvoid FOMO To Plan A Recovery: 5 Things To Do In A Crypto Bear Market

Last updated 1 year ago

We previously discussed on a cryptocurrency exchange, today we will expand on that, and discuss some of the key features of exchanges and how you can use these features to your advantage.

Scallop has its own exchange! Visit to explore! Or visit our guide on how to get started on the exchange

As a quick recap, a cryptocurrency exchange is a platform, either on web or in the form of an app, that allows users to trade cryptocurrency for other cryptocurrency or traditional fiat currency. Within that basic premise, there are a lots of other features, some of which we will cover today:

  • Order books

  • Margin Trading

  • Fractional shares

  • Fractional NFT trading

  • Derivatives (futures and options)

Order Books

The order book is a feature of a centralised exchange, and is much like the older stock market model. You can place buy or sell orders to fill at a future date (if the price reaches said order price). This is useful for planning out trades, setting stop losses and getting good prices in periods of market weakness. We cover more on the order book in .

Margin trading

Margin trading is when you qualify to borrow money against your existing assets to buy more assets. In theory, this could increase your returns, but there are risks involved.

Welcome to the world of leverage! When a trader chooses to trade on margin, they increase their buying power by borrowing from the exchange at a multiple of the assets they have deposited. Say you had $1000 in your exchange account, and leveraged 2x, you would have $2000 purchasing power. This means you could go to the market and buy $2000 worth of assets. You would repay the 'loan' when you sell the asset. What does this do to your returns? Well it doubles them, but it also doubles your potential losses. You pay an interest rate on this loan.

Crypto markets are very volatile, which means that margin traders need to be particularly careful when taking their positions. For this reason, margin trading is not recommended to new traders because it requires advanced risk management strategies.

Fractional Shares

Fractional shares allow investors to buy part of a share which means that investors can buy small amounts of expensive equities. As an example, imagine there is a company with a share price of $3000. With fractional share trading, you can invest any amount, say as little as $30 and so you would own 1% of a share.

Fractional NFT trading

An innovative feature on some exchanges is the fractionalisation of NFTs. This means that users can buy fractions of a whole NFT, for example, a Bored Ape, via a futures contract. And as such, when the NFT is sold, users can receive a share of any profit. This significantly lowers the barrier to entry to purchase valuable NFTs - for example, Bored Apes are priced at around $300,000.

The NFT market outperformed both the crypto and traditional stock market in the last year. The NFT sector is expected to grow between 35 - 54% CAGR over the next 6 years. This makes the fractionalisation of NFTs an extremely attractive proposition for retail investors coming to the platform.

Derivatives (Futures and Options)

These are leveraged trading instruments offered on some exchanges. They are assets who's price is derived from the underlying asset. A futures contract is a promise to buy an asset at a given date, and an option contract gives the purchaser the option to buy an asset at a certain price at a specified date. These two instruments allow you to increase your purchasing power, and have very different payouts depending on the price change. These instruments can be very useful for hedging, but many traders also use them to speculate.

Futures are a leveraged product and you need to be careful as you can lose more than your initial deposit if you do not manage you risk properly.

The advantage to these instruments is that you can achieve a lot more profit from the same amount of capital when compared to spot trading.

Spot Trading is trading an asset for immediate delivery on an exchange (this involves no leverage).

Conclusion

At Scallop we love exchanges, they are the central hubs that allow the world of cryptocurrency to exist. We believe that there is huge utility in these exchanges and are really excited about the technology. We would encourage you to learn how to use exchanges, and watch this space!

https://www.scallop.exchange/en_US/
here
this tutorial
how to get started