What is Spot Trading in Simple Terms
Spot trading is a term used in financial markets to refer to transactions that are executed immediately at the current market price.
Main characteristics of spot trades:
The transaction is completed immediately after the buyer and seller agree on the price. Unlike futures or options, where the trade execution happens in the future, spot trades are executed right away.
The price at which a spot trade is executed is called the spot price. This is the current price in the market at the moment the trade is made.
In the case of commodities such as oil, gold, or agricultural products, a spot trade usually implies physical delivery of the commodity within a short period after the trade is made (e.g., within two business days).
Advantages:
Spot trades are simple and transparent as they are executed at the current market price without complex conditions.
The buyer immediately becomes the owner of the asset, which is particularly important for those who want to quickly obtain the goods or currency.
Spot trades are the simplest and most direct way of trading on financial markets. They allow buying and selling assets at the current market price with immediate trade execution.
