Types of market
Spot vs futures market
4 min
Markets also differ by when the deal is settled — now, or at a future date.
The spot market (mercado à vista)
In the spot market, you buy or sell an asset for immediate delivery and payment (in practice, within a short standard settlement window). The price you agree is today's price, and ownership transfers right away. Buying a share on the exchange today is a spot transaction.
The futures market (mercado futuro)
In the futures market, you agree today on a price for an asset to be settled at a specified future date. A futures contract is a standardized, exchange-traded agreement to buy or sell a defined quantity of something — an index, a currency, a commodity, an interest rate — later, at a price locked in now.
People use futures for two main reasons:
- Hedging — locking in a price to protect against adverse moves. A farmer can sell a crop's price now for delivery after harvest; an importer can fix an exchange rate in advance.
- Speculation — betting on the direction of prices, often with leverage.
The key differences
- Timing — spot settles now; futures settle on a future date.
- Leverage — futures typically require only a small margin deposit, so gains and losses are amplified relative to the cash committed.
- Purpose — spot is ownership today; futures are about price risk over time.
Closely related instruments (forwards, options, swaps) make up the broader world of derivatives, which we explore in a dedicated track. The essential idea here is that the same underlying asset can trade both for today and for the future.
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