Spot market or real-time market is a buzz word in today’s global economy. Every deal cannot be fixed futuristically in anticipation of lucrative profits in the unstable and turbulent marketplace of today. Even developed economies and fool proof investment companies have bitten the dust due to the turbulence in the marketplace. Hence the significance of spot price in forex trading or stocks trading gets further propelled into the limelight. Basically a spot market is a commodity or security market where the goods available are sold for liquid cash and immediate delivery is done without any lag between actual payment and processing and delivery. If the goods are available, payments are made then delivery is done. Simple! The contracts which are bought and sold in these spot markets come into instantaneous effect.

Spot market is also a futures transaction wherein the commodities involved are expected to be delivered in a months’ time or still lesser which is within reasonable proportions. These goods which are involved in the transaction are bought and sold purely based on the spot price that the product commands on the agreed date of actual transaction. The goods involved are subjected to actual trading on a forward physical market. Other instances the spot market is a pure physical market or called as a “cash market”. The reason for this peculiar nomenclature is that prices are settled on the spot and they are not rigidly predetermined when we contrast against the rigid forward prices. An apt example for the operation of spot markets is the sale of crude oil. Being a commodity subject to all the fluctuation in the global economy it cannot afford o have a forward pricing pinned on to itself. Such is the price fluctuation depending on a amazing potpourri of global reasons. So crude oil’s volatile pricing is harnessed by making the sale of the barrels at spot price but the actual physical delivery or dispatch of the barrels takes place in a month or lesser time frame.

Spot pricing is practiced for other commodities too where the pricing is globally suspect to the influence of a multitude of external and internal forces. Sale of energy, natural gases too are decided based only on their spot prices. But these spot markets are operable only on a time scale of days to weeks and when it comes to electricity the variations is minimal and the spot markets exist only for minutes. The catch is that there is not only one single spot marketplace as far as energy or other commodities are concerned. The creation of spot markets is so lucid and they are so versatile that they are ready to be set up and operate wherever there is supporting infrastructure to facilitate the spot transaction. As a matter of fact there are many spot markets that have been conducted on trading floors but have now evolved themselves drastically to be fully operable over the internet. In short spot markets still remains the best option to counter global economic instability and risk free trading for all parties involved.