To aid our understanding, I will like us to firstly understand what a forward FX contract is. A forward FX contract is a customised contract between two parties (in this case, the CBN (seller) and Though the purest expression of the FX carry trade is found in currency forwards, the intuition for carry trade mechanics is best gained by looking at simple bank deposits. The key concept is a In international finance, derivative instruments imply contracts based on which you can purchase or sell currency at a future date. The three major types of foreign exchange (FX) derivatives: forward contracts, futures contracts, and options. They have important differences, which changes their attractiveness to a specific FX market participant.