The purpose of this paper is to present futures and forwards in a detailed manner as one of the derivative financial instruments used in a plethora of economic activities. Furthermore, recent statistics regarding global futures and forwards market and Croatian futures and forwards market are provided. The biggest and historically most important derivatives exchange where futures and forwards are used for trading is the Chicago Mercantile Exchange. Other than their use as a means to protect financial position and avert risk, forwards and futures also serve as an instrument in speculation and arbitrage. Depending on the intended use of terminal derivatives, various strategies exist for investors to make use of in order to shield themselves from risk in the most efficient way, to speculate on prices or to secure profits via arbitrage. Hypothetical examples are provided in order to emphasize the abundance of possible applications of futures and forwards. Futures and forwards contracts have been used for years for trading in developed countries, and in the recent years many Asian countries decided to use these derivative financial instruments. For the time being, Croatia does not possess a developed forwards and futures market. The use of forwards contracts does exist in some instances, namely domestic companies, but the same cannot be said for futures contracts. Stressing the importance of them and incorporating them and other derivative instruments into the domestic market should be done gradually and carefully since derivatives are potentially an instrument of considerable risk.