Glossary

Spot trade

A spot trade is the immediate purchase or sale of a financial instrument such as forex, commodities and securities. Spot trades are enacted as market orders as default, but they can also be specialised orders like stop-loss or limit orders which wait until a trigger is activated to transact an immediate trade at the spot price.

Spot price vs futures price
The spot price of a security is the current cost in cash for the immediate purchase or sale of that security, while the futures price locks in the cost of a security for purchase or sale at some point in the future, usually several months. The spot price should never be identical to the futures price because the market is always forward-looking, meaning all future price speculations are expected to deviate from the spot price due to the many influences at play in the markets.

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