What Are Forex Futures?

Forex futures are exchange-traded currency derivative contracts obli🌊gating the buyer and seller to trജansact at a set price and predetermined time.

Understanding Forex Futures

The price of all 澳洲幸运5官方开奖结果体彩网:futures contracts is based on the 澳洲幸运5官方开奖结果体彩网:underlying asset which, in this instance, will be a currency instrument. All forex futures are written with a specific 澳洲幸运5官方开奖结果体彩网:termination date, at which point delivery of the currency must occur unless an offsetting trade is made on the initi🅠a✅l position.

Forex futures serve two primary purposes as 澳洲幸运5官方开奖结果体彩网:financial instruments:

1. They can be used by companies, or sole proprietors, as a hedging vehicle to remove the exchange-rate risk inherent in cross-border 澳洲幸运5官方开奖结果体彩网:transactions.
2. They can be used by investors to speculate and profit from currency exchange-rate fluctuations.

The key difference between forex or 澳洲幸运5官方开奖结果体彩网:spot trades and forex futures is that the former is 澳洲幸运5官方开奖结果体彩网:over-the-counter (OTC), meaning it's not subject to exchange rules and regulations, while the latter, forex futures, is transacted on established exchanges, primarily the 澳洲幸运5官方开奖结果体彩网:Chicago Mercantile Exchange (CME). The lack of an intermediary exchange forces forex broker𒁃s to have different💙 liquidity providers. This leads to lack of transparency, wider spreads, and discrepancies on price quotes. 

Forex futures are derivative contracts that a🌳re cash-settled when they expire on set dates, normally on the second business day prior to the third Wednesday in the following contract months (March, June, September, December).

Forex futures are traded for a number of reasons. Firstly, because of the various sizes of the contracts, they are a good tool for early 澳洲幸运5官方开奖结果体彩网:investors who want to trade smalleဣr posit🅰ions, and conversely, because they are liquid, large-scale investors will use them 🐈to take on significant positions.

Forex futures can also be hedging strategies for companies who have upcoming payments in foreign exchange. For example, if a U.S. company has agreed to buy an asset from a European company with payment at a future date, they may buy some euro forex futures to hedge themselves from an unwanted move in the underlying asset: the EUR/USD cross rate.