Forward Trading
Hello guys,
one of the desks I am intervieing with is forward trading? Does anyone give me some impressions of how to trade forwards? Whats essential here? Basic things to know? I always thought forwards flow would be tiny. I am fit in option theory, so anything u would suggest me to look through again? How analytical is forward trading? im a mathematician so im looking for complet stuff...
Forwards are similar to futures, only that they are OTC instead of exchange traded. Flow can be huge for certain asset classes. Look up how futures work and you'll get a good idea for forwards...
its also important to consider the daily settlement of futures (and associated margin requirements) versus the settlement of forwards at the close of the contract.
forwards are very common in the fx world, especially with end users like corporates.
the hull text has some interesting discussion on the theoretical relationship between futures and forwards based on an assumption of constant interest rates - its not realistic but its good for establishing a foundation to build from
In finance, a forward contract or simply a forward is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed today. Learn more about futures contracts and you may see good view for forwards...
Generally speaking forwards are beginning to look more and more like futures, in order to mitigate credit risk trading counterparties are tending to move to a fully margined system where cash or haircutted collateral moves back and forth between CPs as the mtm moves. That said when you say forwards do you mean FX forwards?
the desk should be part of the equities and derivatives team: desk is forward trading and EM trading
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