In futures trading, some profits must come from the losses of the other party. However, the profit and loss settlement is not carried out directly between the two parties to the transaction, but is realized by the exchange by transferring the profits and losses in the margin accounts of both parties. When the loss-making party's funds in the margin account of the exchange cannot bear its losses (the margin balance is negative after deducting losses), the exchange, as the guarantor of the contract, must bear this part of the losses on its behalf to ensure that the profit-making party can get all the profits in time. In this way, the loss is convenient for defaulting on debts to the exchange. In order to prevent this debt phenomenon, daily mark-to-market and daily debt-free settlement system (referred to as daily mark-to-market system) came into being.
The daily mark-to-market system refers to the settlement system in which the settlement department calculates and checks the balance of the margin account after the daily closing, and keeps the balance of the margin above a certain level by issuing the notice of additional margin in time to prevent the debt from happening. The specific implementation process is as follows: after the end of each trading day, the settlement department of the exchange calculates the settlement price of the day according to the trading situation of the whole day, and accordingly calculates the floating profit and loss of each member's position, and adjusts the available balance of the member's margin account. If the adjusted margin balance is lower than the maintenance margin, the exchange will issue a notice before the opening of the next trading day, requesting additional margin. If the member unit fails to add the margin on time, the transaction ownership will be forced to close the position.
The daily market-making settlement system plays an important role in controlling the risk of futures market and maintaining the normal operation of futures market.
(1) The daily mark-to-market system settles the transactions and positions of all accounts according to the contracts of different varieties and different months, so as to ensure that the gains and losses of each trading account can be timely, concretely and truly reflected, and provide a basis for timely adjustment of account funds and risk control.
(2) Because this system stipulates that one trading day is the longest settlement period, all the gains and losses of the transaction are required to be settled in time within one trading day to ensure that the debt phenomenon in the member's margin account does not exceed one day, thus controlling the market risk in a relatively minimum time unit of the whole trading process.
Buying a stock is called opening a position.
Selling is called liquidation.
In futures
After opening the warehouse, the original goods were sold out.
Ask for liquidation
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. In the futures market, buying and selling a futures contract 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. However, only a few people make physical delivery, and most speculators and hedgers generally choose to sell their futures contracts or buy back their futures contracts before the end of the last trading day. In other words, the original futures contract is written off by a futures transaction with the same amount and the opposite direction, thus terminating the obligation of physical delivery at maturity. This behavior of buying back a sold contract or selling a bought contract is called liquidation. An open contract after opening a position is called an open contract or an open contract, also known as a position. After opening the position, traders can choose two ways to close the futures contract: either choose the timing of closing the position or reserve it for physical delivery on the last trading day.