Thread: Differences between spot and forward operations (forward)

I am testing a demo trading platform that allows me to operate both in spot and forward outright contracts. If I open a spot position in EURUSD for 50,000 and at the same time a forward with maturity on March 19, the same P/L does not appear in the account summary (gain/loss)

I think I understand your doubt... $32 in spot seems too much for a 50k position if it's just for spread... that would be more than 6 pips... As for the forward, normally spreads there are bigger. Also, they don't always follow the same movement of spot price, although at maturity they should be quite aligned, considering interest rate differentials. I hope you will be served this info... Pete

The difference in P/L can also be due to forward points, which reflect the interest rate differential between the two currencies. If you do not take that into account, you will always see rare differences.

You're just looking at the spread but you forget the time factor. A forward contract has a premium or discount based on the difference between interest rates. That creates that gap in the initial P/L.

It's not just the spread, it's the whole forward structure. Your platform is calculating forward points according to implicit rates, and that's not equal to the spread spot.

If you thought forward and spot were the same with different dates, you need to review basic coverage and interest theory. I recommend going back to the basics before continuing to operate.

Don't worry, many of us have confused that at the beginning. The difference is in how the forward is valued: it takes into account the expectation of future exchange rate and rate differentials.

You're messing with derivative instruments without mastering the elementary. It's not a good idea. Learn first to interpret forwards with implicit rates.

Your account uses mid price for P/L, but what prices are you using to value operations? There may be the error.

For that type of question, you better use an Excel sheet with forwards assessment formulas. It gives you total clarity.