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What is the difference between a forward contract and a futures contract?

Futures agreements are made between a purchaser and a seller and will generally be conducted through a clearing house that allows one party to acquire an investment vehicle at a specific price at a specific point in time at a date that will be determined in the future.

Unlike futures contracts, forward contracts are negotiated privately, usually through a third-party broker. Forward contracts are agreements that are reached at a specified point in time that is used to acquire a specific investment vehicle at a later date in time, that is specifically stated in the agreement.

Forward vs Future Contracts

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