2. Different functions: one of the main functions of futures trading is to find the price, and the contract in forward trading lacks liquidity, so it does not have the function of finding the price;
3. Different performance methods: There are two performance methods for futures trading: physical delivery and hedging liquidation, and the final performance method for forward trading is physical delivery;
4. Different credit risks: futures trading adopts the daily debt-free settlement system, and the credit risk is very small. It takes a long time from forward trading to final physical delivery, during which various changes will take place in the market, and any behavior that is not conducive to performance may appear, with great credit risk;
5. Different margin systems: futures trading has a specific margin system, and whether to charge or how much margin to charge for forward trading is privately agreed by both parties;
6. Different trading places: Futures trading is publicly traded on organized exchanges and is subject to legal supervision; Forward is a private contract, not subject to any control.
Forward contract refers to a contract in which both parties agree to buy and sell a certain amount of certain financial assets at a certain price at a certain time in the future. The contract stipulates the subject matter of the transaction, the validity period and the execution price at the time of delivery. It is a hedging tool. This is an agreement that must be fulfilled.
Forward contracts mainly include forward interest rate agreements, forward foreign exchange contracts and forward stock contracts. A forward contract is a cash transaction, in which the buyer and the seller reach an agreement to deliver a certain quality and quantity of goods in a speciFIc fi period in the future. The price can be determined in advance or at the time of delivery.
Forward contracts are over-the-counter transactions, and both parties have risks. If the spot price is lower than the forward price, the market situation is described as a positive market or premium. If the spot price is higher than the forward price, the market situation is described as a reverse market or price difference.
Futures and spot are completely different. Spot is actually a tradable commodity. Futures are mainly not commodities, but standardized tradable contracts with certain mass products such as cotton, soybeans and oil and financial assets such as stocks and bonds as the targets. Therefore, the subject matter can be commodities (such as gold, crude oil and agricultural products) or financial instruments.
The delivery date of futures can be one week later, one month later, three months later or even one year later. A contract or agreement to buy or sell futures is called a futures contract. The place where futures are bought and sold is called the futures market. Investors can invest or speculate in futures.
References:
Baidu Encyclopedia, Forward Contract, Baidu Encyclopedia, Futures