Differentiate between a Forward Contract and a Futures Contract

A forward contract is a customized, over-the-counter (OTC) agreement between two parties to buy or sell an asset at a specified price on a future date. It is private and has counterparty risk.

A futures contract is a standardized, exchange-traded agreement with a clearing house acting as the counterparty. Futures are highly liquid and subject to daily marking-to-market, which mitigates counterparty risk.