Chapter 01 · Section 1.1

Trading Method

                  Forwards             Futures

Contract Terms     variable             standard
Delivery           expected             only 2-5%
Trading            via phone            ........  
Margins            ........             ........
Credit Risk        ........             ........
Liquidity          ........             ........
Cash Flow          ........             ........

Forward trading is usually done by phoning around to find an interested partner.

What about futures trading?

• a) The same.
  No. You communicate (usually via your broker) with the exchange member who announces your bid or offer by open outcry on the exchange floor. On some exchanges the bid/offer is entered via computer terminals into an electronic exchange.
  b) Decentralized.
  c) By way of a centralized auction market.

(Click here for help)