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Diff. between future and forward contracts?
Please specify the difference between 'Futures' and 'Forward Contracts' (TYPES OF FINANCIAL DERIVATIVES).
Replies (9)
visit https://en.wikipedia.org/wiki/Futures_contract
a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price. The future date is called the delivery date or final settlement date. The pre-set price is called the futures price
A forward contract is an agreement between two parties to buy or sell an asset (which can be of any kind) at a pre-agreed future point in time. Therefore, the trade date and delivery date are separated. It is used to control and hedge risk, for example currency exposure risk (e.g., forward contracts on USD or EUR) or commodity prices (e.g., forward contracts on oil).
Mohit if you read both the diffination than you find the difference ..ie.,.future contracts are traded in the stock exchange but forward contract is a mutual agreement
thanks for reply to everyone.
its ok mohit.. but u know everything is available in the google try to search read and interperate it..this will be helpful for you...
Hi Amit Bhai, I only trade in shares as of now, can you explain me if futures and options are profitable and how to use them
F&O are high risk transactions and if u are new to stock market u should stay away from these, until you understand how these products work.
Forward u need not Mark to Market (MTM)
Future u will have to Mark to Market (MTM) and pay for the diff every day.
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