The main difference between spot prices and futures prices is that spot prices are for immediate buying and selling, while futures contracts delay payment and delivery to predetermined future dates.
A futures contract refers to a deal that’s going to happen at a at a later expiry date, while spot commodity deals are executed immediately.
Futures contract | Spot trading | |
---|---|---|
When is the contract settled? | On a specified expiry date | Immediately |
What strategy is the agreement used for? | Longer-term positions | Short-term trading |
How is the deal settled? | Physically, in cash or rolled over | Physically or in cash |
Is there a fixed expiry? | Yes | No |
Are there overnight funding costs? | No | Yes |
Are there rollover charges? |
Yes |
No |
What is the technical analysis timeframe? |
Charts are only available within the expiry period |
Continuous charting is available |