Forward dealings

Updated: Aug 20, 2021

Agreements to buy or sell specific quantities in goods, currencies, etc., at a stated price and at a stated time in the future. Such dealings are common in international trade where, although both price and exchange rate are subject to frequent variations, contracts need to be made well in advance, particularly where a manufacturer wishes to secure raw materials for future delivery. In such an instance he may prefer to buy either at a fixed forward price or a fixed exchange rate and thereby eliminate at least one variable. Such forward contracts can be, and frequently are, bought or sold. but when entered into primarily for that purpose they are known as futures.

Reference: The Penguin Business Dictionary, 3rd edt.

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James is a lead content editor for Invezz. He's an avid trader and golfer, who spends an inordinate amount of time watching Leicester City and the… read more.