Forward contract is a financial derivative. The difference between forward price and spot price is forward premium or forward discount. Forward premium or discount can be regarded as the buyer's profit and loss. Forward contracts can be used for risk hedging (especially exchange rate risk) or speculation.
Forward contracts and futures contracts are closely related. Compared with futures contracts, forward contracts are not standardized contracts and are not traded on exchanges. As an OTC contract, forward contract can be customized according to the needs of buyers and sellers.