The main difference between spot and forward prices is that spot prices apply to immediate purchase and sale, while futures contracts delay payment and delivery on pre-defined future dates. A cash contract is a document that has a purchase, a guarantee for quick delivery and payment for the cash date, which is about two days after the trading date. Read 3 min A cash rate is the fixed-term interest rate that must be used to discount cash flows on that date. Another statement on this subject: the effective annual growth rate, which equates the current value with the future value. [1] A curve of spot interest rates indicates these interest rates on different maturities. Each investment class has its own curve (with the resulting credit spread – z.B. Swaps versus government bonds – an increased credit risk function). The terminology corresponds to the one above, because the spot rate is by analogy related to the forwardrate flow. Spot prices generally move much faster than futures or options markets, particularly in liquid markets where a large number of market participants make offers and offers. A quick change in price can affect your trade, as it could be run at a different price than the one you asked for – known as negative slippage.
Say you think the price of gold will increase from its current price of $1400 per ounce. So you open a spread bet on the price of the spot which would be beneficial if it increases. You choose to buy the market for $30 per move point at the current price of 1400.30 — you would buy slightly above the underlying market because of the spread. If you were to enter into spot contracts with us, you would speculate on the underlying price of the market. This means that you never have to support the physical delivery of the asset in question and you would always stand out in cash. They would take a position on whether spot prices will rise or fall, which would open up a wider range of possibilities. Spot prices are most often referenced against the price of commodity futures such as oil, wheat or gold contracts. This is because actions always act locally. They buy or sell a stock at the stated price, then exchange the stock for cash. In most cases, you would pay at the place of purchase, not at compensation – in an agreement called “Buy Now, Pay Now.” This contrasts with futures, forwards and options, all of which are used to speculate on the future value of a market.
For all three contracts, you would have set the price of an asset in the present, but you would set an exchange date at some point in the future – the so-called expiry date.