Forwards Contract

You can call Forwards contract as prequel of futures contract. Forwards is the elementary form of derivatives .In forward market buyer and seller enters in to an agreement to exchange the goods for cash. They decide a specific time and date for this exchange. The price of goods are fixed by both at beginning of agreement without intervention of any third party or authority.

This kind of trading only happens at OTC(Over the counter trade). They are not traded on a stock exchange. It means all negotiation between parties happens one on one.

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