Back to Glossary
General TradingF
Forwards
A forward contract is a customized agreement between two parties to buy or sell an asset at a specified price on a future date. Unlike futures, forwards are traded over-the-counter (OTC) and are not standardized or exchange-traded, carrying counterparty risk.
Example
“A European exporter used a currency forward to sell $5 million at a fixed EUR/USD rate of 1.09 in three months, eliminating the risk that a strengthening euro would reduce the value of their dollar revenues.”