forward market
The futures market is a market for buying and selling futures contracts. This kind of transaction is participated by producers and operators who transfer the risk of price fluctuation and investors who bear the price risk, and is guaranteed by various related systems such as margin system. The transaction is conducted in fair competition within the exchange according to law. A notable feature of the margin system is that it makes bigger transactions with less money. The deposit is generally 5- 15% of the contract amount. Compared with spot trading and stock investment, investors put much less money into the futures market than other investments, commonly known as "small bets". The purpose of futures trading is not to obtain physical objects, but to avoid price risks or arbitrage, and generally does not realize the transfer of commodity ownership. The basic function of the futures market is to provide producers and operators with a means of hedging and avoiding price risks, and to form a fair price through fair and open competition.
How to trade in the futures market
The whole process of futures trading can be summarized as opening positions, holding positions, closing positions or physical delivery.
Opening a position, also known as opening a position, refers to the new purchase or sale of a certain number of futures contracts by traders. Buying and selling a futures contract in the futures market is equivalent to signing a forward delivery contract. If traders keep futures contracts until the end of the last trading day, they must settle futures transactions by physical delivery or cash settlement.
In the course of trading, the futures exchange takes compulsory liquidation measures in accordance with the regulations, and the losses arising from liquidation are borne by members or customers. The realized liquidation profit belongs to the futures exchange's forced liquidation due to the violation of members or customers, which is included in the non-operating income of the futures exchange and is not distributed to the violating members or customers; If it is forced to close its position due to changes in national policies, continuous price fluctuations and other reasons, it will be distributed to members or customers.