Tomorrow Next - Tom Next


DEFINITION of 'Tomorrow Next - Tom Next'

In currency transactions, the purchase and sale of a currency made to avoid taking actual delivery of the currency. The current position is closed out at the daily close rate and re-entered at the new opening rate the next trading day. Also referred to as "tomorrow next procedure".

BREAKING DOWN 'Tomorrow Next - Tom Next'

In most currency trades, delivery is two days after the transaction date. Tomorrow-next trades arise because most currency traders are speculators and have no intention of taking delivery of the currency. If a trader buys and closes out his or her currency position the same business day, there isn't a problem with delivery. But traders who wish to hold their position over the current business day and have no intention of accepting delivery of the currency would use tomorrow-next procedures: the position is closed out that business day at a closing rate, and then the position is re-established the following day. This allows the trader to hold the position for that day without worrying about delivery.

  1. Currency

    Currency is a generally accepted form of money, including coins ...
  2. Settlement Date

    1. The date by which an executed security trade must be settled. ...
  3. Delivery

    The action by which an underlying commodity, security, cash value, ...
  4. Delivery Date

    1. The final date by which the underlying commodity for a futures ...
  5. Forex - FX

    The market in which currencies are traded. The forex market is ...
  6. Currency Union

    When two or more groups (usually countries) share a common currency ...
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