What Is the Spot Market?
The spot market—also known as the cash market or physical market—is where financial instruments are bought and sold for immediate delivery. The price you see quoted, called the spot price, reflects the current market value of an asset, and that’s the price at which the trade is executed on the spot.
In simple terms, a spot market allows traders to exchange assets or currencies instantly at live market rates.
Among all spot markets, the foreign exchange (Forex) market is the largest and most liquid in the world.
The Rise of Retail Spot Forex Trading
Not long ago, the Forex market was accessible only to major financial institutions, hedge funds, and central banks. But with the rise of modern trading platforms and high-speed internet, retail traders around the world can now participate in the FX spot market with ease.
At DAK Markets, traders can open live accounts in minutes and access hundreds of trading instruments including Forex, precious metals, indices, commodities, and stocks, all with raw spreads and lightning-fast execution.
Spot Market vs. Exchange vs. OTC
Spot transactions can be conducted either on centralized exchanges or through over-the-counter (OTC) systems.
OTC (Over-the-Counter) Markets:
- Trades are executed directly between two parties, often via electronic communication networks (ECNs) or dealer networks.
- There’s no central exchange or clearinghouse.
- Liquidity providers quote Bid/Ask prices, making them market makers.
- OTC Forex is less transparent but far more flexible than exchange-based trading.
- According to the Bank for International Settlements, daily global FX trading reached $6.6 trillion in 2019, with $2 trillion attributed to spot trades.
Exchange-Traded Markets:
- Operate under centralized regulations.
- Offer greater price transparency and stability.
- Mostly used for trading physical commodities, equities, and some currency futures.
Most Forex spot trading today takes place OTC, including trading on platforms like MetaTrader 5 and cTrader, both available at DAK Markets.
How Does Spot Forex Settlement Work?
While the term “spot” implies immediate execution, settlement of FX spot trades typically occurs within two business days (T+2). Some pairs, such as USD/CAD, settle in one business day (T+1).
Since most traders speculate rather than take delivery of currency, Forex brokers like DAK Markets automatically roll positions forward each day, charging or crediting a swap fee based on overnight interest rates.
Understanding Swaps in Forex
Swaps are interest adjustments applied when positions are held past 5 PM EST (New York Close).
- If you’re holding a trade overnight, your account is either credited or debited based on the interest rate differential between the two currencies.
- If you’re long the higher-yielding currency, you may earn interest. If you’re short it, you may pay interest.
- On Wednesdays, swaps are tripled to account for the weekend when markets are closed.
Why Triple Swaps on Wednesday?
Forex trades settle in two days. A position held through Wednesday settles on Friday. Holding it past that means settlement would land on Saturday, when banks are closed. Therefore, the Wednesday swap includes Saturday and Sunday interest, totaling three days.
You can view your swap values directly in your DAK Markets trading platform under the “Swap” tab on cTrader.
Key Takeaways
✅ The spot market enables real-time trading at live prices
✅ The Forex spot market is the largest financial market globally
✅ Retail traders can now access it easily through brokers like DAK Markets
✅ Most spot trades are OTC, not through exchanges
✅ Settlement takes 1–2 days, but brokers handle it via rollovers
✅ Swaps apply when holding trades overnight, and triple swaps are charged on Wednesdays
Why Choose DAK Markets for Spot Forex Trading?
At DAK Markets, we provide:
- Ultra-low spreads
- Institutional-grade liquidity
- Flexible leverage
- No dealing desk intervention
- Reliable platform with cTrader
Whether you’re a new trader or an experienced professional, DAK Markets gives you the tools to thrive in the spot Forex market.
