Because futures trading is a kind of contract trading of forward delivery goods, a lot of market supply and demand information is concentrated in this market. Different people, different places, have different understandings of all kinds of information, and have different views on the forward price of open bidding. In fact, the futures trading process is a comprehensive reflection of the change of supply and demand and the expectation of price trend at a certain moment in the future. This kind of price information is continuous, open and predictable, which is conducive to increasing market transparency and improving resource allocation efficiency.
The emergence of futures trading provides a place and means for the spot market to avoid price risks. Its main principle is to use futures and spot markets for hedging transactions. In the actual production and operation process, in order to avoid rising costs or falling profits caused by the constant changes of commodity prices, futures trading can be used for hedging, that is, buying and selling futures contracts with the same quantity but opposite trading directions in the futures market, so that the gains and losses of futures and spot market transactions can offset each other. Lock in the production cost or commodity sales price of the enterprise, maintain the established profit and avoid the price risk.
When buying and selling a certain number of spot commodities in the spot market, buying and selling futures commodities with the same variety and quantity but opposite direction in the futures market can make up for the losses in another market with the profits in one market, thus avoiding price risks. Futures trading can preserve the value because the futures and spot prices of specific commodities are affected and restricted by the same economic factors. The price changes of the two are generally in the same direction. Due to the existence of delivery mechanism, the futures price and spot price tend to be consistent with the delivery period of futures contracts.