Futures contracts differ from forward contracts in that

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Futures contracts are standardized in terms of the commodity being traded, the quantity, and the expiration date. Forward contracts, on the other hand, are individually negotiated between two parties, making them less standardized. While both types of contracts can be used by financial managers to reduce risk, futures contracts provide more flexibility and liquidity due to their standardized nature. Futures contracts also allow the holder to buy or sell the underlying asset at a future date, based on the current market price of the asset, while forward contracts are settled at the price agreed upon at the time of the contract's inception. Finally, the value of a futures contract changes in response to changes in the price of the underlying commodity, with the size of the change depending on the size of the price change.

Futures Contracts Differ from Forward Contracts in That