There are three ways of trading forex by individuals, corporation and institution those are
Spot Market
Forward and Future market
The spot market is the largest one because it is the underlying real asset that forward and future markets are based on. In past futures market is more popular because it is available for individual investors for a long period of time.
But after the electronic trading was invented spot market became more popular among individual traders. Forward and future markets became more popular among companies which want to reduce their foreign exchange risk.
Spot market
In spot market currencies are buying and sell by traders according to the current price. The price can determine by supply and demand. When deal is finalized then it is known as “spot deal”. After a position closed settlement is in cash. Spot market deals with the percent transaction rather than future. Usually traders take two days per settlement
Forwards and Future markets
Forward and future markets do not trade actual currencies they deal in contracts and represent claims to a currency type, specific price per unit and future date for settlement.
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