The Internet has opened the foreign exchange market or the forex to each and every one of us. For a budding trader, there's a bunch of trading terms to learn and the word "spot" seems to come up a lot. What's a spot doing in the forex anyway?
The forex trading lingo is pretty confusing and more often than not, several trading terms only mean one thing. Case in point, the spot price is also called the current market price and the spot market is also called the interbank market. Confusing, right? So, in an attempt to get a grip on this "spot" matter we'll get to the gist of this term and simplify its many attachments.
First of all, it's not like a "pip" which is short for "percentage in point". The "spot" is not short for anything. Standing alone, it generally comes from the phrase "on the spot" or at that moment or simply "currently".
Given that definition, we'll tackle more common forex trading terms that are affixed to the "spot". One of which is the forex spot market. Sounds like the stock market huh? Anyway, it's where currency is traded at current market prices. To get a clear picture of this term, it's best to establish the fact that there's also a forex futures market (current as opposed to future, get it?). And by the way, it's also referred to as the interbank market just because two banks usually trade with each other in this market.
The forex trading lingo is pretty confusing and more often than not, several trading terms only mean one thing. Case in point, the spot price is also called the current market price and the spot market is also called the interbank market. Confusing, right? So, in an attempt to get a grip on this "spot" matter we'll get to the gist of this term and simplify its many attachments.
First of all, it's not like a "pip" which is short for "percentage in point". The "spot" is not short for anything. Standing alone, it generally comes from the phrase "on the spot" or at that moment or simply "currently".
Given that definition, we'll tackle more common forex trading terms that are affixed to the "spot". One of which is the forex spot market. Sounds like the stock market huh? Anyway, it's where currency is traded at current market prices. To get a clear picture of this term, it's best to establish the fact that there's also a forex futures market (current as opposed to future, get it?). And by the way, it's also referred to as the interbank market just because two banks usually trade with each other in this market.
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