How is Tom next calculated?

How is Tom next calculated?

Tom-next is calculated by adjusting the closing level of your open position with the interest rate of the currencies involved – rates can change daily as they are based on the underlying market price.

What does Tom Next mean?

Tomorrow next
Tomorrow next (tom next) is a short-term foreign exchange (forex) transaction where a currency is simultaneously bought and sold over two separate business days: those being tomorrow (in one business day) and the following day (two business days from today).

What is Tom transaction?

Tom-next is short for ‘tomorrow-next day’, which is a short-term forex transaction that enables traders to simultaneously buy and sell a currency over two separate business days: tomorrow, and the next day.

What is TN tenor?

TN. A tenor code for Tomorrow-Next, meaning from tomorrow to the next day.

What is considered overnight in forex?

Simply put, overnight positions are trading positions that are not closed by the end of the trading day. In the currency markets, overnight positions represent all open long and short positions that a forex trader possesses as of 5:00 p.m. EST, which is the end of the forex trading day.

What does spot trading mean?

A spot trade, also known as a spot transaction, refers to the purchase or sale of a foreign currency, financial instrument, or commodity for instant delivery on a specified spot date. In a foreign exchange spot trade, the exchange rate on which the transaction is based is referred to as the spot exchange rate.

What is spot Tom and cash?

Cash-spot is an interbank market that witnesses huge volume of transactions. The market comprises three rates — spot, cash and tom (short for tomorrow). The difference between spot and cash rate is called cash-spot spread. Usually, the per day discount works out to be not more than 1-1.5 paise per day.

What are Tom rates?

Tom rate: The rate is quoted and transacted today for the settlement (debit/credit) tomorrow. The forex rates that we see in the normal course, quoted on the screens, in forecasts or in the papers, if specifically not mentioned they are all Spot rates.

What is FX Tod?

TOD: Allows applying for currency exchange upon the exchange rate of the date when the order is executed. All the transactions are executed at the same day.

What is far leg and near leg?

The leg of a swap with the first value date is known as the near leg, whereas the leg of a swap with the second value date is known as the far leg. Unlike a spot or outright trade, a swap trade is either a “buy and sell” or a “sell and buy”.

What is an example of Tom next?

Example of Tomorrow Next (Tom Next) A trader is long on the EUR/USD pair, which is trading at $1.53 (1 euro buys 1.53 US dollars) on its expiration date. The trader issues a tom-next instruction to continue holding onto the pair. Suppose the swap interest rates for the pair are in the range of 0.010 to 0.015.

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