What Is Spot Forex Trading

Many people are confused about the differences between spot forex trading and forex futures trading, and while much of this confusion is grounded in reality, the truth is that there are only a few slight differences between the two methods. Both futures and spot essentially give the forex trader the ability to secure a particular position at some future date and time that is established with the writing of a particular contract.

With forex futures the actual exchange of currency doesn’t happen until the actual preset date and time that was revealed within the contract, and with spot forex the exchange of currency happens when the contract is established. This is the primary difference between the two methods, and it essentially has some significant consequences in the ways various traders use both futures and spot as part of their overall trading strategy. What Is Spot Forex Trading

Because the contract and the trade of currency happens at pretty much the same time with spot, the actual trading positions that are created are not often held onto longer than about a day. This essentially makes spot a short-term technique that if used wisely can increase your leverage points, but only at the expense of being very active within a particular market. The majority of people that utilize futures will not follow-through with the exchange of currency on the actual date and time that is setup with the initial contract, and the majority of traders who use futures are ultimately speculators who don’t ever have any real intention of making any real trades.

Both spot and futures can give a trader an increased amount of leverage if they are implemented correctly, and while many traders like to think that they are using these techniques the right way, many are purely playing games. The best way to learn how to use both spot and futures correctly is to study some real-world examples so that you can see how some of the more skilled traders are actually making money with both methods. Doing this will ensure that you don’t waste your time implementing each one of these without an overall strategy, and hopefully you will then begin to make more money. What Is Spot Forex Trading