Forward contract is a hedging tool that appeared in the early 1980s. It is a contract in which both parties agree to buy and sell a certain amount of physical goods or financial assets at a certain price at a certain time in the future. The contract shall stipulate the subject matter of the transaction, the validity period and the execution price at the time of delivery.

With the arrival of the delivery deadline, various factors affecting the futures contract price will gradually become clear and fixed, market participants will gradually accept the reality, and the party making money or losing money will gradually withdraw from the market and enter a new battlefield. At this time, futures contracts are short-term contracts.