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Definition

A contract to exchange one currency for another at a specific future date (the expiration date) and at a specified rate (the exchange rate). More than most derivatives, foreign exchange futures (forex futures) are very highly geared - usually 100 to 1 - which means that a 1% move in the exchange rate will either double or wipe out the trader's deposit. Like all derivative contracts, the markets for forex futures are dominated by international professional traders and it is very difficult for private investors to be successful. Studies in the US have shown that only one person out of 20 who trades forex futures is successful.

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