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.