Legal Definitions - forward market

A forward market is a type of futures market where contracts are made to buy or sell a commodity or financial instrument at a future date. It is a market where buyers and sellers agree on a price today for a transaction that will take place in the future.

For example, a farmer may enter into a forward contract to sell their crop to a buyer at a fixed price six months from now. This allows the farmer to lock in a price and reduce their risk of price fluctuations in the future. Similarly, a company may enter into a forward contract to buy a certain amount of foreign currency at a fixed exchange rate in the future to hedge against currency fluctuations.

The forward market is used by businesses and investors to manage risk and protect against price volatility. It allows them to plan ahead and make informed decisions based on future prices.