The Course

Forwards, from the ground up

A free, plain-English course on forward contracts — the private, customised agreements that lock in a price today for a trade settled later. Each lesson is short, uses worked examples, and ends with a quick knowledge check.

1. 1 What Is a Forward Contract? A private agreement to buy or sell an asset at a set price on a future date — customised, and traded off-exchange.
2. 2 Forwards vs Futures Same core idea, very different plumbing: private and customised versus standardised, exchange-traded, and cleared.
3. 3 Why Use a Forward? The case for customisation — any size, any date, any asset — and the tailored hedges only a forward can build.
4. 4 Currency Forwards The most common forward of all: locking in an exchange rate today for a payment due in the future.
5. 5 How Forward Prices Are Set Why the forward price differs from today’s spot price — the cost of carry and interest-rate parity, in plain English.
6. 6 Counterparty Risk and Settlement With no clearinghouse behind the deal, the other side must perform — the defining risk of a forward, and how it settles.
7. 7 Forwards Risk and Common Mistakes Counterparty risk, illiquidity, and no daily settlement — the risks that define forwards, and how beginners misread them.