Spot foreign exchange is mainly used for buying and selling, or waiting for the appreciation of the buying currency after buying. There is no leverage in the transaction and the risk is relatively small.

Forward foreign exchange is mainly used to lock the exchange rate of real transactions, and it is a commonly used hedging tool to lock the uncertainty of future exchange rates. Forward foreign exchange can also be used to trade speculation, trading larger nominal principal with less margin, with leverage, high risk and high return.