1. Futures contracts are traded in the exchange, which is open, while forward contracts are traded outside the exchange, mainly in the form of commodity delivery.
2. Futures contracts are standardized contracts, and the varieties, specifications, quality, delivery place, settlement method and other contents of the contracts are uniformly stipulated except the price. All matters of a forward contract must be determined by both parties through negotiation, which is a complicated but adaptable process.
3. Futures contracts are settled through specialized futures settlement companies, which are third parties independent of buyers and sellers. Investors are not responsible for each other, there is no credit risk, only the risk of price changes. The forward contract is delivered only when it expires, and the payment has long been unchanged, so there is no price risk, but without a third party, there may be risks in credit performance.
4. Both parties to the futures contract transaction pay the margin in accordance with the prescribed ratio, which is a fixed ratio, while the forward contract is not standardized, and the non-standard margin ratio is determined by both parties to the transaction, which is not uniform.
5. Futures trading is less risky than forward trading. Futures trading is a more standardized transaction developed by commodity producers from forward contract trading in spot trading in order to avoid risks.
Baidu Encyclopedia-Forward Trading
Baidu encyclopedia-futures trading