Pipruit: Ok, I’ve got it. It looks like a future contract is an exchange traded forward with standardized contract sizes and maturity dates. This is because contract sizes and maturity dates are determined by the exchange itself and its rules of trading. Commander in Pips: Right you are. Ok, let’s go further. Swaps and options… SWAPS Commander in Pips: I want to remind you, that swap is a most common type of transaction on FOREX. It’s even bigger than the spot part of the market. The reason is in the high convenience of such kind trade. In general a swap is a transaction when counterparties exchange different currencies for a definite period of time and agreed to make a reverse exchange on predetermined future date. Also they agreed to pay to each other corresponding annual percent rate. For example, if today is November 01 and the EUR/USD rate is 1.33, we could come to an agreement to make a swap with the notional amount of 100 000 EUR and reverse the transaction 30 days later. It means, that I have to transfer to you $133 000 USD and you have to transfer to me 100 000 EUR. When these 30 days have passed – we will have to make a reverse transaction – I will return to you 100 000 EUR plus interest for using them, and you, in turn, return to me USD $133 000 and interest for using this sum during the period of the swap. These are not standardized contracts and are not traded through an exchange. As you understand, banks are the major participants on the swap market.