<Tr> <Td> <Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> </Td> </Tr> <Ul> <Li> </Li> <Li> </Li> <Li> </Li> </Ul> <P> In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or to sell an asset at a specified future time at a price agreed upon today, making it a type of derivative instrument . The party agreeing to buy the underlying asset in the future assumes a long position, and the party agreeing to sell the asset in the future assumes a short position . The price agreed upon is called the delivery price, which is equal to the forward price at the time the contract is entered into . </P> <P> The price of the underlying instrument, in whatever form, is paid before control of the instrument changes . This is one of the many forms of buy / sell orders where the time and date of trade is not the same as the value date where the securities themselves are exchanged . Forwards, like other derivative securities, can be used to hedge risk (typically currency or exchange rate risk), as a means of speculation, or to allow a party to take advantage of a quality of the underlying instrument which is time - sensitive . </P>

One can describe a currency forward contract as