If you're involved in trading, you've most likely heard of the "Spot Market." But what exactly does it mean?
The Spot Market is where financial instruments, commodities, and other assets are traded for immediate delivery at the current market price. In other words, it's the physical market where buyers and sellers come together to exchange goods and cash.
Here are answers to 7 commonly asked questions about the Spot Market:
The spot price is the current market price of a particular asset, such as gold or oil. It's the price at which an asset can be bought or sold for immediate delivery in the Spot Market.
Immediate delivery means that goods are available for purchase and delivery on demand. In the Spot Market, buyers and sellers agree on a transaction and exchange payment for immediate delivery of goods.
The cash market is another term used to describe the Spot Market. It's called a cash market because transactions are settled in cash rather than through futures contracts.
In the spot market, trades are settled immediately with immediate delivery of goods at the current market price. In contrast, futures markets involve contracts to buy or sell assets at a future date for a predetermined price.
In the Spot Market, buyers and sellers negotiate prices based on supply and demand. Once a transaction is agreed upon, both parties exchange payment and goods for immediate delivery.
The physical market refers to markets where physical assets are traded, such as commodities like gold or oil. It's another term used to describe the Spot Market.
The current market price refers to the most recent-sale price of an asset in a specific marketplace. In Spot Markets, it's used to determine how much an asset can be bought or sold for immediate delivery.
Here are some useful references to learn more about the Spot Market:
