Custodial trading refers to a trading method where a third-party entity, known as a custodian, holds and manages the assets on behalf of the user. In this setup, users delegate the control of their cryptocurrencies to the custodian, often in exchange for added security and ease of access.These custodians provide services like secure storage, trading execution, and account management. By relying on a custodian, traders can simplify the complexities of managing their own wallets and private keys. This can be particularly beneficial for institutional investors who may require compliance and robust risk management.However, custodial trading does come with risks, as users must trust the custodian to safeguard their assets. If the custodian experiences a security breach or financial issues, users may lose access to their holdings. Therefore, while custodial services can enhance convenience, they also require careful consideration of the associated trust and risk factors.