A forward is a financial contract between two parties to buy or sell an asset at a predetermined price on a specific future date. This type of agreement is commonly used in various markets, including commodities, currencies, and securities. Forwards are customized contracts, meaning the terms can be tailored to meet the needs of both parties involved. Unlike standardized contracts traded on exchanges, forwards are typically traded over-the-counter (OTC), which can lead to higher counterparty risk. The value of a forward contract fluctuates with the market price of the underlying asset, making it a useful tool for hedging against price changes or speculating on future price movements.