What is forward trading?
Forward trading is an alternative to buying and selling at spot price, where an investor will physically purchase and own an asset based on its current spot price, with the intention of selling it later for a higher amount. The cash settlement takes place at the end of a forward contract period, as it has a pre-defined date of expiry. A forward hedging strategy is often used to decrease the risk of losses when price movements are particularly volatile in a financial market, as traders can close out their positions before the delivery date of the underlying asset in return for cash. In particular, this applies to forex hedging.