Forward
Subtype of LookingThe forward looking term rate R becomes known at the start T₀ of the calculation period [T₀,Tₙ]
Since by the time T₀ the values I₀, I₁,..., Iₙ on the dates T₀, T₁,..., Tₙ of the referenced overnight index I are not yet known, the rate R is calculated - at least theoretically - based on the corresponding forward values F₀, F₁,..., Fₙ that are implicitly "observed" on T₀
In reality, F₀, F₁,..., Fₙ are not directly observable in the market as of T₀, but this doesn't matter since the required quantity that needs to be known is the applicable average of F₀, F₁,..., Fₙ
The latter can be extracted by the traded prices of instruments that reference such forward looking term rates, provided such instruments exist.
Note, R is not known prior to time T₀
Look at Backward for comments regarding the comparison between the two types of rates.