What is Spot vs Futures Trading?

Spot trading involves buying or selling an asset at its “current market price” (CMP). In contrast, in futures trading, a “futures contract” is traded to buy or sell an underlying asset at a specified price for settlement at a future date. For example, 

• Buying physical gold is different from buying an MCX gold futures contract. 
• The first involves the underlying commodity purchased at the spot price.
• The second method represents a standardised exchange-traded derivative contract.

Let’s gain more clarity on the difference between spot and futures:

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