Standardized futures contract means that the terms of the contract are unified in the exchange, including the size of the contract, delivery date and delivery place. This standardization enables participants in the futures market to understand and trade futures contracts conveniently, and reduces the complexity of trading.
In terms of transaction convenience, the listing of futures contracts on the exchange means that traders can openly buy and sell through the exchange, and the trading process is transparent and can be supervised and protected by the exchange.
In terms of liquidity, because futures contracts are standardized and listed on the exchange, the liquidity of the futures market is usually good. Traders can buy and sell futures contracts at any time, and the market price is fair and just.
To sum up, the advantages of futures contracts lie in their standardization, transaction convenience and liquidity, which makes the futures market an effective risk management tool and price discovery mechanism.
However, this does not mean that forward contracts have no advantages, and the flexibility of forward contracts may be beneficial in some cases. Therefore, whether to choose a futures contract or a forward contract needs to be judged according to the specific needs and market environment.