Skip to content
GetProfitable
Search
Dictionary

Spot FX

A currency trade for near-immediate delivery, normally settling two business days after the deal, and the reference point for every other FX instrument.

Spot is the plain purchase of one currency against another at today's rate, with the actual exchange of money happening on the spot-date. Everything else in the market, from a fx-forward to a currency option, is priced off the spot rate plus the cost of carrying the position to a later date.

Retail forex is spot in name only. Almost no retail account ever takes delivery; positions are rolled indefinitely through tom-next, which converts the trade into an open exposure financed by the interest differential.

Example: you buy EUR 100,000 against dollars at 1.0840 on Monday. Settlement would be Wednesday: EUR 100,000 in, $108,400 out. A retail broker instead rolls the position each night and applies a swap-rate rather than moving any principal.

Related: spot-date, tom-next, rollover, fx-forward

Educational only, not advice. Spotted an error? Post in Site Feedback.