What is different between forward and futures

Question

Accepted Answer

Forwards are customized contracts between two parties while futures are standardized contracts traded on exchanges.

Forwards are traded over-the-counter while futures are traded on exchanges
Forwards are customizable in terms of contract size, delivery date, and delivery location while futures are standardized
Forwards have higher counterparty risk while futures have lower counterparty risk due to the involvement of a clearinghouse
Forwards require a higher initial investment while futures require a lower initial investment
Examples of forwards include customized currency contracts between two parties while examples of futures include S&P 500 futures traded on the Chicago Mercantile Exchange

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