Spot Price
Overview - Spot Price
The spot price or spot rate is the actual price of a security at an exact moment in time. Unlike futures which estimate the value of a security "x" days in the future, traders use this value to gauge the current supply and demand of a security. Traders look for any discrepancies between the spot rate and the futures market to identify arbitrage opportunities. A very basic trading strategy is to initiate a short position when the futures market is exorbitantly above the spot price and to take a long position when the futures market is exorbitantly below the spot price.
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