What is tom-next?
Tom-next (short for tomorrow-next day) is how forex speculators avoid taking physical delivery of currency while still keeping forex positions open overnight.
Forex trades would – if left unchecked – normally result in the trader taking delivery of the asset they have traded. In forex, the expected delivery day is two days after any transaction, but tom-next can be used to extend the trade beyond this date.
Instead of accepting delivery of the currency they have traded, the position is extended and the provider swaps any overnight positions for an equivalent contract that starts the next day. When calculated, the difference between these two contracts is the tom-next adjustment rate.