Futures

Futures are financial instruments that can be used to reduce risk. A future is a agreement between a buyer and a seller to make a trade in the future at a predetermined price.

Futures are often used in the foreign exchange market for currency hedging. A currency future is a contract to do a foreign exchange in the future at a fixed exchange rate. Companies doing international business uses currency futures for hedging. The EMU-cooperation has reduced the need for hedging in Europe. When trading with futures, both buyers and sellers are obligated to complete the trade.