Spot trading refers to trades executed ‘on the spot’ – that is for cash between two participants. The term is mainly used to refer to the spot FX market, where currencies are exchanged for one another directly. Cash equities refers to a similar market for equity products, and excludes, like spot forex, all derivatives.
The spot market is not limited to forex but has equivalents in a range of commodity and energy markets. Whatever the traded asset, the basic difference is that spot trades are executed instantaneously, in practice with a T+2 settlement. They are contrasted to forward or futures trades, which are settled on a given date in the future.
A similar term is cash equities, which refers to stock trades executed for cash and immediate settlement, again contrasted with derivatives. In both spot and cash equities trading, fees are minimal and markets typically liquid. On the other hand, spot transactions offer no customizability and must be executed at the prevailing market price. For more illiquid stocks or currencies, spot transactions may impact the market price of the asset, resulting in unfavourable moves.
ADSS offers a range of global markets for traders, with CFD opportunities in indices, commodities, forex, equities and more. We also feature tutorials, how-to guides, and weekly webinars to help you navigate the financial markets and find better trading opportunities. You can start trading and investing online by opening a live trading or demo trading account.