1) Forward foreign exchange contract

Benefits: There is no need to pay a deposit, and the term and scale can be agreed by both parties at will, which is more flexible.

Disadvantages: High probability of default. When one party breaches the contract, the other party may suffer huge losses.

2) Foreign exchange futures contracts

Agree: Generally speaking, as an independent third party, a market maker will not break the contract, but when one party breaks the contract, the market maker will be liable for compensation.

Disadvantages: you need to pay a certain deposit. For retail investors, there is a risk of being forced to close their positions due to insufficient balance in the margin account. And in many cases, we can't find a contract that matches the size and duration of assets.

3) Option contract

Pro: When the underlying price (such as share price) develops in a favorable direction, is there an upper limit on the income? And in some portfolio investment strategies (such as put option strategy), the portfolio can get higher returns than the benchmark.

Disadvantages: when the price of the subject matter develops in an unfavorable direction, the option fee will be lost.

4) Currency swap

Pro: For both parties with comparative advantages, swap can make both parties obtain financing at lower interest rate, thus reducing the financing cost. At the same time, resist a certain degree of exchange rate risk.

Disadvantages: It is often difficult to find counterparties with matching maturity and scale.