Wednesday, August 14, 2013

Spot Market by Forex

Spot Market


Currency spot trading is the most popular foreign currency instrument 
around the world, making up 37 percent of the total activity (See Figure 3.1). 
57%
5%
1%
37%
1 2 3 4
Figure 3.1.The market share of the foreign exchange instruments as of 1998: 
1- spot; 2 – options; 3 – futures; 4 – forwards and swaps. 
The fast-paced spot market is not for the fainthearted, as it features 
high volatility and quick profits (and losses). A spot deal consists of a bilateral 
contract whereby a party delivers a specified amount of a given currency 
against receipt of a specified amount of another currency from a 
counterparty, based on an agreed exchange rate, within two business days of 
the deal date. The exception is the Canadian dollar, in which the spot delivery 
is executed next business day. 


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