Forward Market

A forward market is a financial arrangement where two parties agree to buy or sell an asset, such as a commodity or currency, at a predetermined price on a specific future date. This contract helps both parties manage risks, like price fluctuations, by locking in prices ahead of time. It is commonly used by businesses to plan budgets and protect against adverse price changes, ensuring certainty in their future costs or revenues. Unlike spot markets, where transactions occur immediately, forward markets focus on future transactions based on mutually agreed terms.