<p id="isPasted">Forex futures are standardized, exchange-traded contracts that obligate a buyer and seller to exchange a specific amount of one currency for another at a fixed price on a set future date. Unlike the "spot" forex market, which is decentralized (OTC), futures trade on regulated exchanges like the CME Group. </p><p><strong>1. The Mechanics of a Trade</strong></p><ul><li>Standardized Contracts: Every contract has a fixed size. For example, a standard Euro FX future represents 125,000 euros. To trade smaller amounts, "E-micro" contracts (e.g., 10,000 units) are available for retail traders.</li><li>Centralized Pricing: All traders see the same price and volume data from a single exchange, ensuring transparency that is not always present in spot forex.</li><li>Expiration & Rollover: Contracts typically expire quarterly (March, June, September, December). Most traders close their positions or "roll" them into the next month before expiry to avoid physical delivery of the currency. </li></ul><p><strong>2. Margin and Mark-to-Market (MTM)</strong></p><ul><li>Initial Margin: You don't pay the full value of the currency up front. Instead, you deposit a "performance bond" (often 3%–12% of the total value) to open a position.</li><li>Daily Settlement (MTM): Profits and losses are calculated at the end of every trading day based on the closing price.<ul><li>If the price moves in your favour, cash is credited to your account daily.</li><li>If it moves against you, cash is debited. If your balance falls below a maintenance margin, you will receive a "margin call" to add more funds or face liquidation. </li></ul></li></ul><p><strong>3. Settlement Methods</strong></p><ul><li>Cash Settlement: Common in markets like India (NSE), where the difference between your entry price and the final settlement price (e.g., the RBI reference rate) is settled in your local currency (INR) without any actual foreign currency changing hands.</li><li>Physical Delivery: In international markets like the CME, if a position is held past expiry, the trader is legally obligated to deliver or receive the actual foreign currency.</li></ul><p><strong>Summary of Differences (2026)</strong></p><p><strong> Feature Spot Forex Forex Futures</strong></p><table data-animation-nesting="" data-sae="" style="border: none; border-collapse: collapse; table-layout: auto; width: 652px; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-style: normal; font-variant-ligatures: normal; font-variant-caps: normal; font-weight: 400; letter-spacing: normal; orphans: 2; text-align: start; text-transform: none; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; white-space: normal; background-color: rgb(16, 18, 24); text-decoration-thickness: initial; text-decoration-style: initial; text-decoration-color: initial;" id="isPasted"><tbody><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 16px 12px 0px;">Market Type</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 16px 12px 0px;">Decentralized (OTC)</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 0px;">Centralized Exchange (e.g., CME, NSE)</td></tr><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 16px 12px 0px;">Contract Size</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 16px 12px 0px;">Highly flexible</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 0px;">Standardized (100k, 10k, 1k)</td></tr><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 16px 12px 0px;">Expiry</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 16px 12px 0px;">No expiry (hold indefinitely)</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 0px;">Fixed expiry dates</td></tr><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 16px 12px 0px;">Overnight Fees</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 16px 12px 0px;">Pay/receive "swap" or rollover interest</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: 0.8px solid rgb(45, 47, 53); min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 0px;">No overnight funding fees</td></tr><tr data-complete="true" data-sfc-cp=""><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: none; min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 16px 12px 0px;">Transparency</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: none; min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 16px 12px 0px;">Price varies by broker</td><td colspan="undefined" data-complete="true" data-sfc-cp="" style="border-bottom: none; min-width: 4em; vertical-align: top; color: rgb(230, 232, 240); font-family: "Google Sans", Arial, sans-serif; font-size: 14px; font-weight: 400; line-height: 22px; letter-spacing: 0px; padding: 12px 0px;">Uniform price for all participants</td></tr></tbody></table>
<p id="isPasted">Forex futures are standardized, exchange-traded contracts that obligate a buyer and seller to exchange a specific amount of one currency for another at a fixed price on a set future date. Unlike the "spot" forex market, which is decentralized (OTC), futures trade on regulated exchanges like the CME Group. </p><p><strong>1. The Mechanics of a Trade</strong></p><ul><li>Standardized Contracts: Every contract has a fixed size. For example, a standard Euro FX future represents 125,000 euros. To trade smaller amounts, "E-micro" contracts (e.g., 10,000 units) are available for retail traders.</li><li>Centralized Pricing: All traders see the same price and volume data from a …</li></ul>