Forward Booking


DEFINITION of 'Forward Booking'

A way of trading currency while minimizing the risk of volatile exchange rates. The booking company (risk agents) will write up a contract specifying what the rate of exchange will be, and in doing so will assume the exchange rate risk. The contract will also outline a timeline in which the trade must be made. The fee associated with the forward book is usually based on a percentage of the amount being traded in the contract.

BREAKING DOWN 'Forward Booking'

For example, if Mr. A plans to purchase a big ticket item from Europe in January, and the euro is quite low in December, he may want to forward book in case the euro skyrockets in the next month. The booking company, after making the contract would hope for the euro to plummet. However, if it doesn't, they would still have the fee paid for the transaction.

  1. Currency

    Currency is a generally accepted form of money, including coins ...
  2. Exchange Rate

    The price of a nation’s currency in terms of another currency. ...
  3. Authorized Forex Dealer

    Any type of financial institution that has received authorization ...
  4. Risk

    The chance that an investment's actual return will be different ...
  5. Forex - FX

    The market in which currencies are traded. The forex market is ...
  6. Currency Trading Platform

    A type of trading software used to help currency traders with ...
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