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+--- Thread: The concept of forward and future contracts (/Thread-the-concept-of-forward-and-future-contracts--70890)
The concept of forward and future contracts - MrStuden - 06-30-2021
<p>Could you please elaborate on the following line :<br>Future contracts and forward contracts are valued in such a way as to have zero value at the time of the conclusion of the contract by the investor. It seems a little confusing to me. Since I think this line may be very important, I would like you to help me with the basic underlying principle and understanding of this statement.<br></p>
RE: The concept of forward and future contracts - FergusonRebecca - 07-01-2021
Futures contract - This type of contract meets certain standards that allow you to trade on a futures exchange
RE: The concept of forward and future contracts - JacksonSally - 07-01-2021
There also seems to be standardization to increase liquidity, if I'm not mistaken, so standards are usually set for such areas as expected quality and expected quantity.
RE: The concept of forward and future contracts - LeeDonna - 07-01-2021
Both buyers and sellers seek to profit from it. Usually, buyers tend to raise prices potentially. This leads them to ensure that they can access the product at a lower price if such a price increase occurs. Likewise, sellers predict a drop in the value of the commodity and, to maximize income, they try to use futures to lock in prices so they can sell at a higher price should the price drop. Of course, these forecasts are not always accurate, and both parties have a chance to realize losses on the contract. Read more about it here https://fractalerts.com/blog/future-vs-forward-contract/.