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.
b) Decentralized.
• c) By way of a centralized auction market.
  Yes. Whereas any two persons can make a forward contract anywhere in the world, a centralized exchange is necessary for futures trading. Continue

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