Futures Trading

A futures contract is an agreement to buy or sell a specified quantity of a specified asset on a future date for a specified price.

A futures contract is quite similar to a forward contract. It involves two parties who enter into a transaction to buy or sell a product at a particular price at a future date. This contract would also result in either party’s gain or loss. The most notable difference between the two is where they are being traded.

A futures contract is traded on a stock exchange, while a forward contract is traded privately, i.e., between two parties without the involvement of an exchange. Futures are exchange-traded derivatives, while forward are over-the-counter derivatives.