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Spot vs. Resistance in Trading

In trading, understanding the concepts of "spot" and "resistance" is crucial for making informed decisions. The spot price refers to the current market price of an asset at which it can be bought or sold instantly. It represents the real-time value based on supply and demand. Traders use the spot price as a reference to enter or exit trades, helping them determine when to buy low and sell high.

On the other hand, resistance refers to a price level where an asset faces selling pressure, making it difficult for the price to rise further. It acts as a psychological barrier in the market, where traders expect a reversal or slowdown in price momentum. When the price approaches a resistance level, many traders opt to sell, leading to potential downward pressure.

Identifying resistance levels is key to developing an effective trading strategy. Traders use resistance in combination with other indicators, such as volume and trend lines, to predict market reversals or breakouts. If a price breaks above a resistance level, it may signal a bullish trend, while failure to breach it could suggest a bearish reversal.

Both spot prices and resistance levels provide traders with critical insights for timing their trades and managing risk effectively.

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