The peer trade is associated with direct, decentralized interactions between two sides without the need for a central intermediary or exchange. Here are the basics:
Main players
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Buyer : A party that obtains securities (eg shares, bonds) on the other side.
- Seller : A party that sells securities to the buyer.
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Market makers : Persons or firms providing liquidity and transactions on behalf of other market participants.
Decentralized trading platforms
Peer trade can be facilitated by various decentralized platforms, such as:
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Cryptocurrency Stock Exchange : Online platforms where buyers and vendors sell cryptocurrencies such as Bitcoin, Ethereum or others.
- Stock Market Platforms : Online platforms connecting buyers and sellers for securities transactions.
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Sales : Physical places or online space where market participants can interact directly.
Main concepts
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Order Types : Different types of orders such as market order (buy/sell), restriction order (fixed price), suspension loss (fixed price), etc.
- Liquidity service providers : Persons or companies providing liquidity to the trading platform, allowing faster sales to execute.
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Market depth : The level of trade activity in a certain security, reflecting the number of buying and sales orders.
Benefits
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Increased efficiency
: Decentralized trading platforms can make transactions faster than traditional exchanges.
- lower fees : Some decentralized platforms charge lower fees compared to traditional stock exchanges.
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Improved availability : Online platforms can connect buyers and vendors with a wider range of members.
Risks and challenges
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Liquidity Risks
: Market makers or liquidity providers may not always be available, causing possible price disorders.
- A counterparty risks : Buyers and vendors may face difficulties to close transactions, taking into account the differences in market conditions.
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Regulatory Problems : Decentralized trading platforms often operate outside the traditional regulatory system.
Best Practice
- Do careful research on the platform, its users and market conditions before engaging in peer trade.
- To avoid significant losses, set clear goals , risk management strategy and stop level.
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Stay on the date with market development and adjust trading strategies accordingly.
In conclusion, peer trade offers a number of benefits, including increased efficiency, lower fees and improved access. However, it also arises with risks and challenges that require careful consideration and caution. Understanding the basics of peer trade, buyers and vendors can make deliberate decisions to reduce potential shortcomings.
