The global foreign exchange market accounts for over $5 trillion U.S. dollars worth of average daily trading volume, making it the largest market in the world. Within this market, there is a growing class of derivative securities: forex futures. This article will define and describe these futures contracts and their popular applications, as well as present some analytical tools necessary to successfully negotiate a contract in the $112 billion dollar a day forex futures space. What Are Forex Futures? Forex futures are standardized futures contracts to buy or sell currency at a set date, time, and contract size. These contracts are traded at one of the numerous futures exchanges around the world. Unlike their forwards counter-parts, futures contracts are publicly traded, non-customizable (standardized in their specified contract size and settlement procedures) and guaranteed against credit losses by an intermediary known as a clearing house. (Related Derivatives: Futures vs. Forwards) The clearing house provides this guarantee through a process in which gains and losses accrued on a daily basis are converted into actual cash losses and credited or debited to the account holder. This process, known as mark-to-market, uses the average of the final few trades of the day to calculate a settlement price. This settlement price is then used to determine whether a gain or loss has been incurred in a futures account. In the time span between the previous day’s settlement and the current’s, the gains and losses are based on the last settlement value. Futures Margins Futures clearing houses require a deposit from participants known as a margin. Unlike margin in the stock market, which is a loan from a broker to the client based on the value of their current portfolio, margin in the futures sense refers to the initial amount of money deposited to meet a minimum requirement. There is no borrowing involved, and this initial margin acts as a form of good-faith to ensure both parties involved in a trade will fulfill their side of the obligation. Furthermore, the futures initial margin requirement is typically lower than the margin required in a stock market. In fact, futures margins tend to be less than 10 percent or so of the futures price. Should an account take on losses after daily mark-to-market, the holders of futures positions must ensure that they maintain their margin levels above a predesignated amount known as the maintenance margin.