31 August 2025
If you have ever exchanged money for a holiday or transferred funds abroad, you have likely made a spot FX trade, even if you did not realise it.
A spot FX trade is simply a currency exchange at the current market rate, with the money delivered almost immediately. In most cases, this means within two working days. It is similar to buying something online: you agree on the price now, and the transaction is processed straight away.
Key Points
- The Foreign Exchange (FX) market operates 24 hours a day, five days a week
- It opens on Sunday evening, and closes on Friday evening, based on New York time
- more than $2 trillion is traded in spot FX each day, making it one of the most active global financial markets.
- Currency quotes show two prices, one to buy and one to sell the base currency
- In 'GBPUSD', GBP is the base currency and USD is the quote or 'terms' currency
- Exchange rates are always shown as how much of the terms currency 1 unit of the base currency buys, e.g. GBPUSD is £1= X many dollars
- Currency quotes are usually shown to four decimal places
- If £/$ is 1.2512, "'25' is the "big figure" and "12" are the "pips" (points in price)
- Spot trades historically settled in two days, but same-day and next day are possible for many currencies, with timezones being the most important factor.
What Do “Bid” and “Ask” Mean?
These terms come from the banks or brokers who provide the prices:
- The bid price is what they are willing to pay to buy the base currency from you.
- The ask (or offer) is what they will sell the base currency to you for.
Need Help?
Foreign exchange can be confusing, especially with all the industry terms. At Oku Markets, we aim to keep things simple and transparent. If you are moving money internationally or want to understand your options, we are here to help.
Contact us at info@okumarkets.com or call 0203 838 0250.
Summary
A spot FX trade is the most common and straightforward way to exchange currencies. It uses the current market rate and typically settles within two business days. Whether you are buying a property abroad or sending money to family, understanding spot trades can help you make informed decisions.
Frequently Asked Questions
1. What does a spot FX trade involve?
It is a currency exchange at the current market rate, with settlement usually in two business days.
2. Is this the same as exchanging money at a bank?
Yes, it is essentially the same — just done at a larger scale or through a specialist provider.
3. How long does it take to complete a spot FX trade?
Most settle on a T+2 basis, meaning two working days after the trade is agreed, but many currencies now settle ont he same day as the trade or the next day.
4. What is the difference between bid and ask prices?
The bid is the price to sell a currency, and the ask is the price to buy it. The small gap between them is the spread.
5. Can individuals use spot FX trades?
Yes. Whether you are buying property abroad or sending money to family, spot trades are a simple and effective option.
