What does it mean to buy a position?
Buying and opening positions refers to the operation of doing long, buying up and buying more. When investors are optimistic that the future price may rise, they can open positions by buying in advance, wait for the future price to rise, and then complete the transaction to make a profit. There is another name for buying and opening positions: bulls.
What is the difference between buying and selling?
Corresponding to buying and opening positions are selling and opening positions, which refer to the operations of shorting, buying and selling. When investors are bearish that the future price may fall, they can open positions by lending some goods to the market in advance, and then wait for the future price to fall before buying goods from the market to repay the loan, thus completing a selling and opening operation.
For example, in the futures market, investors are optimistic about the future price trend of non-bulk commodities (such as precious metals) and deliberately buy a futures call contract. The contract stipulates that investors can buy this commodity at the market price at the time of signing the contract within the agreed time limit.
A transaction is actually a contract to buy and sell things without actually delivering the goods. Just pay a certain performance bond at the highest rate (generally 10%) and freeze the purchase of funds in the contract account. If the goods that investors are optimistic about really expect to rise, investors can sell and close their positions for profit.
For example, the market rice is 4000 yuan/ton. One investor predicted that due to the recent shortage of water in Thailand, China's grain producing areas will decrease, and the price of rice will rise sharply in the future. In order to get the difference, he bought and opened a position in the rice futures market. In other words, he bought the recently bullish rice contract and his capital account was frozen. If the price of rice rises to 5000 yuan/ton after half a year, he can sell the position, that is, sell the original contract and earn the difference after deducting the relevant handling fees. At the same time, unfreeze the fund account.