Settlement
The final step of a trade, when the money and the asset actually change hands.
In plain English
The final step of a trade, when the money and the asset actually change hands.
Settlement is when a trade becomes real: both sides deliver what they promised. In spot forex between banks, that normally happens two business days after the trade date (T+2), when one bank wires euros and the other wires dollars.
Retail traders rarely see this, because brokers roll positions forward each day with swaps instead of delivering currency. But settlement is the plumbing that makes the whole market trustworthy, and when it fails, things get scary (see settlement risk).
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