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Spot Trade

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Spot Trade
The purchase or sale of a foreign Currency or commodity for immediate Delivery.
    
Spot trades are settled "on the Spot", as opposed to at a set date in the Future. It is also called "Cash trades".
    
Futures transactions that expire in the current month are also known as Spot trades because in the case that goods are actually delivered, Delivery time is reasonably expected to take one month.
    
It is the opposite of futures contracts, that usually expire well before any physical Delivery. Foreign-Exchange contracts are the most common kinds of Spot trades. If these kinds of contracts are not settled immediately, traders would expect to be compensated for the Time value of their money for the duration of the Delivery. Because these contracts are settled electronically, the forex market is essentially instantaneous.
Posted by  Institute for International Research
 
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