The key difference between hedging and forward contract is that hedging is a technique used to reduce the risk of a financial asset whereas a forward contract is a contract between two parties to buy or sell an asset at a specified price on a future date. Since the financial markets have become complex and grown in size, hedging has become increasingly relevant to investors. Hedging provides certainty with a future transaction where the relationship between hedging and forward contract is that the latter is a type of contract used for hedging
