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What is a Tom-Next?

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Tom-Next is an abbreviation for Tomorrow Next or Tomorrow Next Day. In this procedure, a certain value is held beyond the actual trading day.

Normally, all trades end at the moment when the exchange transaction for the current business day is finished. Nevertheless, it is possible to maintain a trade beyond this day. In this case, the closing value of the respective derivative is quoted. The next day the trade starts again with the current opening value. If this is now below the entry value, the broker pays a corresponding compensation to the trader, so that he can receive his stake from the previous day. If the value is higher, the broker receives the difference. Tom-Next is usually used when the trader expects that the corresponding underlying asset will continue to rise on the next day and thus a higher return can be achieved. However, the compensation granted by the broker is not always the same.

Also, there are no fixed percentages to which a broker must adhere. As a rule, the provider himself decides whether he grants such compensation. Tom-Next, of course, also poses a risk, because there is an increased probability of total loss of the invested capital. Moreover, if leverage was used, the loss may occur as soon as the exchange opens. This depends solely on the ratio of the leverage.

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