{"id":3631,"date":"2018-11-28T13:40:28","date_gmt":"2018-11-28T13:40:28","guid":{"rendered":"https:\/\/www.wasteyourtime.co\/?page_id=3631"},"modified":"2020-07-20T07:57:37","modified_gmt":"2020-07-20T06:57:37","slug":"tom-next-or-tomorrow-next-trade","status":"publish","type":"page","link":"https:\/\/traders-paradise.com\/magazine\/trading-dictionary\/t\/tom-next-or-tomorrow-next-trade\/","title":{"rendered":"Tom Next or Tomorrow Next Trade"},"content":{"rendered":"

DEFINITION of Tom-next or tomorrow next trade<\/b><\/h4>\n

Tom-next or “tomorrow next trade” represents the one-day swap. <\/span><\/p>\n

WHAT Tom-next IS IN ESSENCE<\/b><\/h4>\n

In Forex it is used to postpone or roll a maturing foreign exchange deal out to a future value date. This is a one-day swap and it is quoted between tomorrow and the next day (it is carried out between tomorrow and the spot rate). <\/span>
\nA trader can maintain a long position in the underlying currency<\/a> transaction for one more day. And without having to make physical delivery of the underlying amount of currency. <\/span><\/p>\n

Theoretically, the trader could continue to roll the value date using tom\/next transactions. And keep the position on for an unspecified period of time. <\/span>
\nIn other words, instead of accepting the delivery of the currency, they have traded, the position is extended. And the <\/span><\/p>\n

provider swaps any overnight positions for an equivalent contract that starts the next day. <\/span><\/p>\n

When calculated, the difference between these two contracts is the tom-next adjustment rate.<\/span><\/p>\n

HOW TO USE Tom-next<\/b><\/h4>\n

Example: trader buys 20 million euros against dollars spot at 1.2000. Spot transactions are typically due in two business days. <\/span><\/p>\n

But the trader decides to extend the value date by using a tom\/next. <\/span><\/p>\n

In the tom leg of the transaction, the trader sells 20 million euros for dollars for value tomorrow. That matches the original deal’s value date. <\/span><\/p>\n

The second leg of the tom\/next is a spot transaction to buy 20 million euros against dollars for the next value date. So, this allows the trader to keep his long position in 20 million euro\/dollar for one additional day without making physical delivery.<\/span><\/p>\n

Or you are in this situation, for example.<\/span><\/h3>\n

Let’s say that from the last trading day, and it is Friday. And you didn’t close our GBP\/USD position, and you’re in precisely this situation. You’re long 100k GBP\/USD. <\/span><\/p>\n

You can’t trade out of that today, because 100k traded today has a value date of Wednesday, whereas the 100k traded on Friday has a value date of Tuesday. <\/span><\/p>\n

What you need to do is sell a 100k GBP\/USD forward (value date Tuesday), and buy 100k GBP\/USD spot, to roll your position to today. Executing this swap trade is known as a tom\/next roll. <\/span><\/p>\n

The price on the two legs will be slightly different due to interest rate differences between the dollar and sterling.<\/span><\/p>\n

This forward transaction is known for short as tom-next or simply as T\/N.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

DEFINITION of Tom-next or tomorrow next trade Tom-next or “tomorrow next trade” represents the one-day swap. WHAT Tom-next IS IN ESSENCE In Forex it is used to postpone or roll a maturing foreign exchange deal out to a future value date. This is a one-day swap and it is quoted between tomorrow and the next […]<\/p>\n","protected":false},"author":4,"featured_media":7237,"parent":3048,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"content-type":"","_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"class_list":["post-3631","page","type-page","status-publish","has-post-thumbnail","hentry"],"yoast_head":"\nTom Next | Financial Dictionary | Traders Paradise<\/title>\n<meta name=\"description\" content=\"Tom-next or tomorrow next trade represent the one-day swap. 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