Open position refers to the number of all open buy or sell contracts at the end of the transaction. What is different from the volume is that the open position refers to the unilateral quantity, not the sum of the sales contracts. It is expressed by the formula: the number of positions = the number of open buying contracts = the number of open selling contracts.
Futures trading is a zero-sum game. For every dollar of profit, there is an equal loss of one dollar. Of course, futures exchanges and brokerage companies will take a small part. However, for each open contract, there must be a position in the market opposite to the other hand. At the end of the transaction, the number of all open long contracts must be equal to the number of open short contracts. As for the saying that traders often say "buy more than sell" or "sell more than buy", it is not true. It is more appropriate to say that "potential buying is greater than selling" when the price rises, and "potential selling is greater than buying" when the price falls.
In futures trading, people who make money must lose money. If traders correctly judge the market trend and make money, where will the money come from to pay their profit positions? Yes, this is a loss-making position. Although it sounds uncomfortable, this is the real face of the futures market. Through the analysis of positions, we can know what those who hold loss positions are doing. As a trader in the futures market, we must clearly understand what kind of information the change of positions can bring us.
1, the position is the fuel to maintain the price trend-I compare the market to a train, the train needs fuel to start, and the position is fuel. When the fuel runs out, the fire will naturally go out, and the train will have no motivation to continue running. If the fuel of the market trend runs out, the trend will stop or reverse. When the position is gradually reduced, it means that the fuel on the market is decreasing, and the original price trend will not last long. In order to continue the stable and strong price trend, we need to see that the positions are increasing steadily, if not increasing, at least not decreasing. If a trader can understand that opening a position is synonymous with market fuel, his trading knowledge is at least better than that of other 80% traders.
2. Holding positions is an indicator that there are different opinions in the market-a market cannot be formed without different opinions. Even in a bull market, people are always short; In the short market, there will always be people who do more. Different opinions will make traders willing to open positions, thus increasing their positions.
3. The change of positions determines whether the loss-making positions are replaced-technical analysts don't care whether the loss-making party uses new funds to make up the margin or new traders join in to replace the old losses. The key is that the funds are deposited in the settlement center of the securities firm. The losers in the market must pay the winners. When the losing party is unwilling to hold the losing position again and cuts the position, it will reduce the position. Obviously, the misjudged party paid the price. But for technical analysts, with the reduction of positions, it shows that losers are gradually withdrawing from the market, and losers can't just be winners. Unless a new loser joins, it indicates that the original price trend will no longer be stable. Even if it doesn't reverse soon, smart funds will gradually leave with the loss-making party. Both the loss-making party and the profit-making party are gradually leaving the market, and the fuel for maintaining the original price trend is gradually exhausted. Of course, the original trend cannot continue.
4. An ideal and stable upward trend-as the price rises, the steady increase of positions is a stable upward trend signal. As a technical analyst, you should always monitor what the profit-making party is doing, because you must stand on the side of the profit-making party to become a winner. In the upward trend, prices are rising, and it is obvious that bulls control the situation. The price increase indicates that the original bulls are adding positions or new bulls are joining, but at the same time, short positions in the market are also adding positions to spread costs or new short positions are entering the market. In either case, it means that the market is on a steady upward trend. Some people may question, isn't the buyer always equal to the seller in the market? Yes, but the key lies in which side dominates the market. The direction of price movement is controlled by the strong side. Those who are eager for long-term profits are willing to pay higher prices, while short sellers who lose money are forced to share the costs. If the price is rising and the position is decreasing, what does it mean? It shows that the bulls are profiting from liquidation and the bears are also lightening their positions. The price increase is due to the opening of new bulls, but all the main bulls have left. Predictably, it is obviously difficult for the power of the new retail bulls to maintain the continuation of the price trend, but it is uncertain whether there will be a reversal, because the market has not only two directions-up or down, but also a possibility of flat consolidation, that is, shock.
5. Ideal and stable downward trend-When the price falls, the gradual increase of positions is a stable downward trend signal. This phenomenon shows that bears dominate the market trend, they are establishing new profit short positions, and bulls are also trying to spread costs downwards and increase loss positions. Bulls regard themselves as "cannon fodder" and constantly provide fuel for falling prices. Different from the bull market, in the short market, the price falls, even if the position is not increased, the downward trend will continue as long as it is not reduced. Only when profitable funds (short positions) stop making profits will the original trend stop. The decrease in positions represents that the market has lowered its expectation of the continuous price decline, and the fuel that contributed to the price decline has also decreased. It is worth noting that the ideal and stable short market usually happens less than the ideal and stable long market, and the common phenomenon in short market is the reduction of positions. If you want to see the increase in positions, I'm afraid there are not many such opportunities. This is because first of all, the price falls with self-esteem, and secondly, most traders are not used to shorting. I have met many such customers. I told him I could go short, but he told me to wait until he fell to the bottom before telling him to go in and buy. As a technical analyst, if you hold a short position in the short market and can see that the position remains at a flat level, you should be satisfied, because in this case, the losing bulls are gradually replaced, and the short fuel is still maintained at a certain level.
6. The price is stable, and the position is increased-when the price fluctuates in a range or the market is sorted out, when the position is increased, it means that both long and short sides are launching an offensive. Once the closing price breaks through the range on a certain day, the driving force brought by the loss-making stop loss cannot be underestimated. When seeing this phenomenon happen, technical analysts often pay attention to the breakthrough with their eyes wide open, so as to be present at the first time.
7, the price is stable and lighten the position-such a market must be dead and lifeless, the price is consolidating, and both long and short sides have no intention of opening positions, so traders can not pay attention to this market for the time being.
The strength of analyzing price trends can be measured by the relationship among price trends, trading volume and positions. When the price moves in the main trend direction, the volume of transactions and positions will also increase. However, in the short market, when the price falls, the ideal state of steady increase in trading volume and positions is rare.
Although trading volume and positions are important indicators for technical analysts, none of them is omnipotent, and the use of indicators is not mechanical, so they must be analyzed together with other indicators. What we need to understand is that futures trading is not a science, but an art, which requires not only the imagination and free-spirited mentality of the artist, but also the rigorous operational attitude and self-discipline of the scientist. This is precisely the key to the most difficult success of futures trading. Few people can achieve the harmony and unity of the two. Once you do, you will succeed in this industry.