Future Trading And Forex | Forexgen

In the U.S. exchanges, a foreign exchange futures contract is an agreement between two parties to buy/sell a particular (non-U.S. dollar) currency at a particular price on a particular future date, as specified in a standardized contract common to all participants in that currency futures
exchange. (See Box 6-1 on the evolution of foreign exchange futures.) When entering into a
foreign exchange futures contract, no one is actually buying or selling anything—the participants are agreeing to buy or sell currencies on pre-agreed terms at a specified future date if the contract is allowed to reach maturity, which it rarely does.

NOW AND For The End of the Year Unique Offers offered from ForexGen.com
Throughout our partnership with the industrial leaders, we are capable of delivering incomparable quality of online currency trading service.
ForexGen services are all controlled by the international banking and financial regulatory standards.
ForexGen is continuously providing the Forex market's safest trading terms & conditions. Providing professional currency trading services that meet our client's expectations is our first priority.

A foreign exchange futures contract is conceptually similar to an outright forward foreign exchange contract, in that both are agreements to buy or sell a certain amount of a certain currency for another at a certain price on a certain date.

However, there are important structural and institutional differences between the two instruments:
w Futures contracts are traded through public “open outcry” in organized, centralized
exchanges that are regulated in the United States by the Commodity Futures Trading Commission. In contrast,forward contracts are traded “over-the counter” in a market that is geographically dispersed, largely self-regulated, and subject to the ordinary laws of commercial contracts and taxation.

w Futures contracts are standardized in terms of the currencies that can be traded, the amounts,
and maturity dates, and they are subject to the trading rules of the exchange with respect to
daily price limits, etc. Forward contracts can be customized to meet particular customer needs.

w Futures contracts are “marked to market” and adjusted daily; there are initial and aintenance
margins and daily cash settlements. Forward contracts do not require any cash payment until
maturity (although a bank writing a forward contract may require collateral). Thus, a futures
contract can be viewed as a portfolio or series of forwards, each covering a day or a longer period
between cash settlements.

w Futures contracts are netted through the clearinghouse of the exchange, which receives
the margin payments and guarantees the performance of both the buyer and the seller in
every contract. Forward contracts are made directly between the two parties, with no
clearinghouse between them.

Read The Full Topic Here:
http://www.forexgen.com/level-1-forex-intro./forexgen-academy.html