Spot
A transaction for immediate delivery, typically settling within two business days (T+2) in forex.
A spot trade is an exchange at the current price settling in two business days (T+2). Spot is the largest, most liquid segment of forex, and the base for pricing forwards, swaps and options.
A spot transaction is an agreement to buy or sell a financial instrument at the current market price for immediate settlement. In forex, immediate means T+2 (two business days). The spot market is the largest and most liquid segment of forex, and the spot rate serves as the foundation for pricing forwards, swaps, and options. Most retail forex trading is conducted at or near spot rates.
How It Works
- Executed at the current market price displayed on the trading platform
- Standard settlement in forex is T+2: currencies are exchanged two business days after the trade
- Retail positions held overnight are rolled forward to avoid physical delivery, with a swap credit or charge
- Spot markets operate 24 hours during the forex trading week
Trading Tips
Most retail forex trading is effectively spot trading. Positions are rolled at the daily cut-off.
The spot rate is your baseline for comparing forward contract pricing
Liquidity is deepest during the London-New York overlap (13:00-17:00 UTC). Spreads are tightest then.
Spot Example
Say you buy EUR/USD Monday at 1.0850. Euros settle into your account Wednesday, T+2, with two nights of market risk in between. That delay is why weekend gaps hurt spot holders and why forwards exist.
How Traders Use Spot
Use spot for anything settling this week and forwards beyond it. Mind the T+2 calendar over holidays and weekends, when settlement stretches and swap math gets weird.
Related Terms
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