Cryptocurrency Q&A What is the difference between a contract and a futures contract?

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

Chiara Chiara Fri May 17 2024 | 6 answers 1481
Could you please elaborate on the distinction between a contract and a futures contract? I've been trying to grasp the nuances of these financial instruments, but I'm still a bit hazy on the specifics. In my understanding, a contract is a legally binding agreement between two or more parties that outlines the terms and conditions of a transaction. However, when it comes to futures contracts, I'm not entirely clear on how they differ. Are futures contracts a subset of the broader category of contracts, or are they fundamentally different in nature? Furthermore, I'm curious about the role of futures contracts in the cryptocurrency and finance world. How do they work, and what are their primary uses? Are they primarily used for hedging purposes or for speculative trading? I'm eager to gain a deeper understanding of these concepts, so I hope you can shed some light on these matters. Thank you in advance for your assistance. What is the difference between a contract and a futures contract?

6 answers

DaeguDivaDance DaeguDivaDance Sun May 19 2024
Forward contracts are traded over the counter (OTC), meaning they are not listed on a formal exchange. Instead, they are arranged directly between two parties.

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SakuraTide SakuraTide Sun May 19 2024
Futures contracts, on the other hand, are standardized and traded on a regulated exchange. This standardization ensures transparency and liquidity in the market.

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WindRider WindRider Sun May 19 2024
A forward contract is a private agreement tailored to meet the specific needs of the parties involved. It differs significantly from the standardized futures contract.

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ChristopherWilson ChristopherWilson Sun May 19 2024
The forward contract is customizable, allowing the parties to negotiate and agree upon the terms that best suit their objectives. This flexibility is one of its key advantages.

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Lorenzo Lorenzo Sun May 19 2024
Prices in futures contracts are settled daily until the end of the contract, providing regular updates on the market's perception of the underlying asset's value.

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