What are Forward Contracts in Forex Trading?

What are Forward Contracts in Forex Trading?
Can anybody explain me the meaning of Forward Contract. I am a newbie and willing to start forex trading.

Best answer:

Answer by jane
just google it .you will have more info.if you able to study the news up to date deeply then only you can success in trading but i know it is hard ! but there is a way i found know as “automated trading”.some highly qualified forex professionals trade your financial assets.it worked me well ..! all you just have to sit and watch!. I made good money.check this http://www.bestforextradingplatforms.com

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  1. johndestabistana (January 1st, 2014 at 5:49 am)

    (You think Jane is spamming, “google it???”)
    A forward contract or simply a forward is an agreement between two parties to buy or sell an asset at a certain future time for a certain price agreed today.[1] This is in contrast to a spot contract, which is an agreement to buy or sell an asset today. It costs nothing to enter a forward contract. The party agreeing to buy the underlying asset in the future assumes a long position, and the party agreeing to sell the asset in the future assumes a short position. The price agreed upon is called the delivery price, which is equal to the forward price at the time the contract is entered into.

    The price of the underlying instrument, in whatever form, is paid before control of the instrument changes. This is one of the many forms of buy/sell orders where the time of trade is not the time where the securities themselves are exchanged.

    The forward price of such a contract is commonly contrasted with the spot price, which is the price at which the asset changes hands on the spot date. The difference between the spot and the forward price is the forward premium or forward discount, generally considered in the form of a profit, or loss, by the purchasing party.

  2. Sofia (January 1st, 2014 at 6:11 am)

    FX forward contract is- it is a fixed-price contract made today for delivery of a certain pre-settled amount of a currency at a specified future date and than the specified date is the forward trade settlement date with the agreed upon price called forward rate.

    Features of Forward Contract Forex trading:

    * No money changes hands today

    * Currency pair exchange takes place on future date

    * It also stipulates that the full payment need not to be exchanged on the settlement date.

    * The main purpose is to hedge against the changes in the exchange rates occurred at the Forex trading platform, only the difference between the forward rate and the spot rate prevailing on the settlement date will be paid.

    Hope this helps you clear your doubts!

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