Spot trading is a type of trading where transactions are made for the immediate delivery of an asset at the current market price (spot price). Simply put, it is when you buy or sell something right now, and settlements occur immediately or within a few days.
Key features of spot trading:
Instant delivery:
Assets and money are transferred almost immediately after the transaction is concluded.
Current market price:
Transactions are made at the price that is relevant at the time of the transaction.
Transparency and liquidity:
Spot markets are usually transparent and easily accessible for trading.
What assets can be traded on the spot market?
Almost any asset can be traded on the spot market:
Currencies:
The largest Forex market operates on the principle of spot trading.
Stocks and Bonds:
Many securities are also traded on spot markets.
Goods:
Commodities such as oil, metals, agricultural products.
Cryptocurrencies:
Spot trading of cryptocurrencies is a popular way to buy and sell digital assets.
How does spot trading differ from other types of trading?
No deadlines:
Unlike futures or forward trading, spot trading does not provide for deferred delivery of the asset and settlements in the future.
Simplicity:
Spot trading is considered simpler and more understandable, especially for beginners, as it does not require complex contracts or long-term speculation.
Risks:
Despite its simplicity, spot trading is still associated with risks, as asset prices can fluctuate, and there is a possibility of losses.