Spot Trade

Spot Trade Meaning:
In foreign exchange terminology, a spot trade refers to a foreign exchange transaction done for delivery on the spot value date. The value date for a spot trade falls two business days after the transaction for all currency pairs except for USD/CAD for which spot is only one business day after the trade.

In a spot trade, the term “spot” derives from the phrase “on the spot” which refers to the immediacy of the transaction’s delivery date, as opposed to the more extended delivery dates seen with forward outrights or currency futures. Spot trades are by far the most common type of foreign exchange transaction, accounting for the vast majority of the trading volume seen in the interbank market.