Forwards and Futures

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Definition:

A 'Forward' contract is an agreement to take delivery of an asset on a particular date in the future, at a particular price. The agreed price is known as the forward price. Forward contracts can be both traded 'over the counter' (that is privately negotiated directly between two parties, without going through an exchange) or on a stock exchange. Forward contracts traded on a stock exchange are known as 'Futures'.

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Some terms you may want to find more about:

underlying, derivative, trading on-the-margin, offsetting trade, speculator/speculating, hedger/hedging, stock exchange, over-the-counter