Chapter 01 · Section 1.1

Cash Flow - Futures

                   Forwards             Futures


Contract Terms     variable             standard
Delivery           expected             only 2-5%
Trading            via phone            centralised
Margins            negotiated           uniform
Credit Risk        taken by             clearing
                   counterparty         house
Liquidity          lesser               greater
Cash Flow          on delivery          .......

Now, in futures trading profits are received or losses are paid:

Every customer deposits a margin. If one side of the trade loses money, the other side of the trade makes a profit. The clearing house credits the profitting party's account and debits the losing party's account.