Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Forward contract definition

A forward contract is a contract that has a defined date of expiry. The contract can vary between different instances, making it a non-standardized entity that can be customised according to the asset being traded, expiry date and amount being traded.

Forward contracts have an agreed expiry on them, but that does not mean that they have to be kept open for the duration. Most forward contracts can be closed early, if you want to limit losses or take profits.

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Find out more about forward contracts in our education section.

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