FX Spot vs Daily Forward
Does any one know the difference between trading fx spot vs daily forwards? Are there benefits trading the latter?
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FX spot is very button pressing execution based.
FX forward is trading fx swap which is voice execution based, and you will have exposures to short term rates market. So I would recommend the latter.
Thanks for sharing. In terms of operations, margins, etc. , is one more convenient than the other?
Also, do asset management firms trade over-night fx forward instead of spot?
I’m not 100% sure on margins and operation but both are relative simple products so it should be straight forward.
FX spot and swaps are 24/7 during weekdays, but prime liquidity for Asia EMFX for example are obviously during Asian trading hours; but London and US can quote despite much lower liquidity.
Spot is just t+2 settlement for most currency pairs, where FX swap will roll that date to another date.
FX swap funding points (overnight and Tom next) has very limited liquidity and pretty much only trade during their prime hours
It is possible to request overnight fx forward, but this is probably due to client forgot to roll their position early. If the position is large enough it can cause severe market impact.
Thanks again. For DMFX, is spot or 1 month forward more liquid?
In terms of 1 month forward, do people trade with daily rolling or more with a fixed expiration and roll on expiry to the next month forward ?
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