Forward - a contract that is a kind of agreement between the two sides, which specify delivery of the underlying asset.Highlights of the agreement are discussed even before the conclusion of the contract.Implementation of the contract is carried out on the well-established criteria and within the period stipulated.The contract does not require the cost to the contracting parties, with the exception of fees related to the execution of the contract with the involvement of intermediaries.Forward can be called a futures contract, which is until the expiration was not closed a clearing mechanism, and supply is still held.
Specification forward contracts
Forward - a contract to conclude which is the realization of a real sale or purchase of a particular asset.The agreement allows the supplier to insure the buyer against any unforeseen changes in the value of the underlying asset.Contractors are always reinsured by unplanned developments.Conclusion The agreement excludes the possibility to take advantage of favorable market conditions.Prior to signing the agreement, the counterparties should analyze information on the reputation of the partner, as well as clarify its solvency.This will avoid a situation where one of the parties would be unable to meet its obligations due to bankruptcy or bad faith.
objectives of the partnership
Forward - a unique format of partnership, which is applied to earnings on the difference in rates of the underlying asset.The person opening the short position, is counting on reducing the cost of the asset.The opposite side, are betting on the growth of assets, opens a long position.Forward belongs to the category of individual contracts, which determines the low liquidity of the secondary market and underdeveloped.The notable exception to the rule serves the forward currency market.Forward - a transaction which at the conclusion of which both sides are taking a reasonable amount of an asset for them.This price is called the cost of delivery.It is a statistical throughout the period of the agreement.There is the concept of the forward price, which is the value of an asset for a specified period of time.Her second name, delivery price, which was mentioned above.She set the contract concluded at a time.
legal side of the issue
Under the legislation, the forward - this is an agreement which results in the actual delivery of the goods.The object of the agreements can be any valuable property that is available.Link to the actual existence of an asset should not limit the ability of the seller in the aspect of the contract and the sale of goods, which will either be confirmed or established in the near future.Implementation of the contract is carried out after a clearly defined period of time.Calculation of the agreement and obligation to deliver realized immediately, but after a specified period of time.Commercial contracts carried out in the framework of the OTC market.In order for the agreement took place on the market must be members who want both to buy and to sell a certain amount of the asset.
Hedging
Forward - is the universal format of making a speculative profit, which allows a professional hedging.The price of the asset on the forward contract will always be different from the value of the asset on a cash contract.Total cash equivalent goods can be defined as the process to conclude the contract, and at the stage of its implementation.The average cost of an asset at the time of the contract is determined based on quoted market prices for the goods.The price is the result of a kind of careful analysis of the market situation.Traders make a kind of forecast, taking into account all factors that may have an impact on the change in prices.We consider some prospects for movement of the price chart.
Differentiation fovardov
Forward - is a security that allows speculators to earn.In the process of development of the market, formed a kind of division of the contracts into two categories:
- Deliverable.
- calculated or non-deliverable.
Total supply contracts is the delivery of goods and this is negotiated in advance.Mutual settlement shall be effected by the payment of one counterparty to another difference between the price of goods or a predetermined amount.Everything depends on the conditions of the contract.Settlement agreements do not provide for the final delivery of the goods.The contract is solely for the purpose of payment of the losing party the difference in price of the asset, which was formed for a certain time.The difference in the value of the underlying asset is called variation margin, and it is calculated based on the actual price of the goods on the market.
