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Spot Forex Market

Nowadays undoubtedly the largest market worldwide spot is the Forex market, which in fact is the largest financial market compared to any other. In this market the simultaneous exchange of the currency of a country is produced by another currency, such as euros per dollars, dollars per yen, dollars per pound, etc. The way this market operates is by trading with currency pairs like EUR/USD (Euro against the US dollar), consisting of a base currency and a counterparty currency or quotation.

After EUR/USD, another pair of fairly common currency in the Forex market is the GBP/USD (British pound against the US dollar). In this case, if the GBP is increasing its price against the USD (strengthened), then the investor buys hoping that the price will continue to rise. Conversely, if the GBP weakened against the USD (or in other words the USD strengthened against GBP) then the investor sells. The biggest benefit of Forex market is its high level of liquidity that allows investors to enter and exit the market at will.

Also to Forex, Spot Market can be defined as one of the main means currently used for currency trading worldwide. In the currency market, brokers offer two quotes buy / sell. These rates one for purchase and one for sale, the first being the price at which the broker is willing to buy foreign currency and the second the price which he is willing to sell. In this financial market, the difference between the rate buying and selling rate is called margin or spread, and constitutes much of the profits of a broker. In the spot market, currency transactions are immediate delivery (no physical delivery of money. In the spot market are made the most foreign exchange transactions both large investors (banks, companies, financial institutions, etc.) and among retail investors (mainly individuals with relatively small capital compared to institutional investors).

Andres Salazar
Sales VP LATAM
asalazar@tvmarkets.com

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