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Spot definition
Spot is the buying or selling of a financial instrument for immediate delivery at the current market price, known as the spot price. The venue where these trades happen is the spot market.
In spot markets, settlement happens almost at once or within a short standard window set by the asset class. Forex spot trades commonly settle within two business days, while many crypto spot trades settle within seconds. You trade at the live rate rather than agreeing a price now for delivery later.
Spot differs from a futures or forward contract, which fixes a price today for delivery on a set future date. A spot trade has no future delivery date, so it gives you direct exposure to the currency, commodity, share, or crypto at the current price.
Spot Example
You buy EUR/USD in the spot forex market at 1.0850, the current market price.
If EUR/USD rises to 1.0900, you close the spot position for a gain:
1.0900 - 1.0850 = 0.0050, or 50 pips
If EUR/USD falls to 1.0800 instead, you close for a 50-pip loss.
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