Below you will find out about the most common types of transactions in the foreign exchange market. They include futures, swap, spot, and forward. Learn more about them to master trading on Forex and become a successful trader who can earn some extra money.
Types of transactions in Forex
There are several types of transactions in Forex. Let’s consider the most common ones.
Future contracts are a type of buy and sell transactions in Forex at a fixed price on a specific future date. A deal to buy and sell, which the seller will use in the future to sell and the buyer to buy a certain amount of currency at a fixed price within the specified period.
Swap is a transaction that involves the simultaneous buy and sell of currency for the same amount but with different value dates. That is, one currency will be purchased in exchange for another on a certain date using one transaction. The same currency then will be sold for another on a different date during the second transaction. This AvaTrade review will tell you more about swap.
Spot is a transaction in Forex when the settlement is made immediately as a rule within two days.
Forward is a transaction in the currency market, in which the calculation is made after a predetermined time. The forward transaction is mainly used for risk insurance. The calculated forward rate is equal to the ratio of interest rates on the loan multiplied by the exchange rate.