| Difference | Forwards | Futures |
| Size of contract | Decided between buyer & seller | Standardized in each futures market |
| Price of contract | Remain fixed till maturity | Changes everyday |
| Market to market | Not done | Market to market everyday |
| Margin | No margin required | Margins are to be paid by both buyers & sellers |
| Counter party risk | Present | Not present |
| No. of contracts in a year | There can be no. of contracts | No. of contracts in a year are fixed. |
| Hedging | These are tailor-made for specific date and quantity and hence are perfect | Hedging is by nearest month or quarter (if there are 4 contracts) and quantity contracts, so it is not perfect |
| Liquidity | No liquidity, as they are not traded on secondary market | Highly liquid |
| Nature of market | Over the counter | Exchange traded |
| Mode of delivery | Specifically decided. Most of the contracts result in delivery | Standardized. Most of he contracts are cash settled |
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