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A forward contract is a private and customizable contract that needs to be settled at the end of the agreement and is traded over the counter.

A futures contract has standardized terms and is traded on an stock or commodity exchange, where prices are settled on a daily basis until the end of the contract.

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11y ago

Forwards are customised contracts. Futures are those forwards which are traded under regulated environment, such as stock exchanges.

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Q: What is the basic difference between a forward and future market?
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Related questions

Difference between forward market and spot market?

Spot market is also known as "cash market" where the commodities are sell on the current price or the spot rate and deliver immediately, where as in case of forward market, market dealing with commodities for future delivery at prices agreed upon today (date of making the contract).


Difference between futures market and forward market?

A Futures market is a forward market that trades through a centralised exchange, just like most stocks do. The classic forward market occurs as an Over-The-Counter (OTC) trade, rather than through an exchange.


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1) forward contract is not standardised one..it is only traded in OTC(over the counter) where as future contract is a standardised one it is traded in Secondary Market


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When you choose future contract over forward contract?

When there isn't an active market for the forward contract. Generally, Futures contracts have a much more active open market than forward contracts and have alot more choice in terms of expiration months than forward contracts.


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