The spot or cash market is the actual price of a currency at that moment in time - the price for immediate delivery. A trader will contact his broker or bank and ask for a price for the pair of currencies he wants to trade.
A spot contract is a contract between two parties who exchange an agreed upon amount of two currencies at an agreed upon exchange rate.
The normal delivery time for a forex contract is two days. With the exception of the Canadian dollar which is one day. The reason for the two days for deliver was established long before modern technology and sufficient time was needed to verify all the details of the transaction. Nowadays, transactions are concluded in fractions of a second.
Transactions are normally concluded via telephone or automated dealing desks. When using the telephone to transact a trade it is important to know the correct etiquette. This can differ dramatically from broker to broker or bank to bank. It is important that you first contact your broker or bank and ask for the correct procedure for placing orders.
The spot market is the market this book is concentrated on and is the market most traders will speculate on. I will however cover other common vehicles of trading forex for reference.
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