Currency Trading Futures Vs. Forwards
There are similarities and differences between currency trading forwards and futures. Both are based on contracts that certain currency is to be delivered at a designated time for an agreed upon price. Currency trading forwards are much riskier than currency trading futures. Forwards deal only with the date bought and date of settlement, meaning there is no daily shift in value. The value of the forward is only determined on the day of settlement, be it loss or gain. Futures, on the other hand, have values that are adjusted daily and this continual revaluing results in lower investor risk. Additionally, futures are traded on the stock market which inherently offers the investor certain protections. Forwards are done through contracts between people, offering substantially less protections, if any at all.