What are limitiations of Forward Trade ?

As the forward contracts are traded bilaterally and there is no organized exchange, the following limitations exist.

• Lack of centralized trading – You have to find Opposite Party for trading.
• Illiquidity – You may not find opposite party for reverse trade.
• Non standardization – No standard size of contract.
• Counter-party risk – Other party may not honour the contract.
• Due to all these limitations, there was birth of future contracts.