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Definition of backwardation

Also known as the inverted market or inverted market (Inverted Market), it means that under special circumstances, the spot price is higher than the futures price (or the recent month contract price is higher than the forward month contract price), and the basis difference is a positive value. In the reverse market, as time goes by, the spot price and futures price will gradually converge to the same by the delivery month, just like in the forward market. In the reverse market, since the demand is much greater than the supply, the spot price is higher than the futures loan price, and when the contract price rises more than the forward contract price, you can enter the market to do bull market arbitrage. But inverse market bull arbitrage has huge profit potential and limited risk. In addition, whether in the forward market or the reverse market, the practice of bear market arbitrage is to sell the contract and buy the forward contract at the same time.