A spot market. Modern realities

The English word “Spot” means literally “place”. Therefore, “in Spot” means “on location” and a spot market is where transactions are made instant. It is logical to assume that trade in this place is the goods, properties and whose characteristics are well known. This product needs to be standardized in every part of the world. Logic didn't let you - spot market trades foreign currency, precious metals, stones, grain, meat, gas, oil and other commodities “first” required.

Market Participants

Of Course, each of them is grouped in a certain place. For sale and exchange of the national currencies used various financial exchanges. In the trades involved:

1. Traders-dealers, to earn selling and exchanging currencies in force in their own interests.
2. Brokers are people who work “in the name and on behalf of" committing the transaction in the interests of third parties.

Do time

According to the terms of payment and fixing of the currencies involved in the purchase and sale, transactions are divided into three groups:

1. Payment the day of the performance (TOD English today – today).
2. Payment the next day (TOM-tomorrow, tomorrow).
3. The day after the transaction.

From theory to practice

Spot gold market compared to the market of currencies and securities is less dynamic, but more reliable, so the rate of gold is not as high but at least stable. Currency jumps due to the fact that the national currency and the shares of corporations are more susceptible to the political environment.

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Here is an example. Now you have a situation with a public debt of the United States. The probability of technical default made the spot market to react instantly to falling demand and prices on Treasury bonds Federal reserve, but gold is always a price. In addition, not all participants of this sector work with a speculative purpose (to buy goods at a lower price, so after some time to implement more expensive). Many players sign contracts for production needs (medicine, electronics, and jewelry industry).

Natural gas is mostly sold on the forward market (where contracts are concluded today, and the supply of goods takes place in the future), a spot gas market is small by volume. The deals running on the principle of "intercept time”. Prices from-for stops of gas production the North sea are approaching the prices for Gazprom products sold by futures contracts. This will lead to an increase in sales of Russian gas to Europe.

Purchasing products (grain, meat, sugar) mostly uses forward exchange (you can also enter into a contract for the supply of wheat, which has not increased). The spot market for those who miscalculated their needs or failed to maintain the reserves.

One of the most influenced by the market – product of the steel industry. Index Metalsea (for its calculation is the arithmetic average of a specified list of products in three price categories: from 1 ton, 5 tons, 20 tons, divided by 100) within a few months of weekly, then increased, then fell. Recent events in Syria and the related reaction of world leaders, called on the spot markets, negative dynamics.