Stock futures trade
Stock futures trading, also called "stock cash trading", is the symmetry of "stock futures trading". Refers to the stock trading behavior of selling stocks immediately or after a short period of time (1-3 days) and receiving cash delivery. Stock spot trading is conducted between the stock seller who has the spot and is ready to trade immediately and the buyer who wants to get the stock immediately. Buying stocks in cash is usually not for speculation, but for investment. Some minority shareholders mostly buy and sell stocks by spot trading.
The agreement of stock futures trading is a standardized contract, and the contract terms, transaction amount and delivery period contained in each contract are standardized. Because futures trading is settled in the forward at a predetermined price, if the stock price rises at the time of delivery, the buyer gains and the seller loses; On the other hand, if the stock price falls, the buyer loses money and the seller gains.
In the actual transaction, if the futures buyer thinks that the due delivery is unfavorable to him, he can sell the stock futures contract with the same delivery period before the delivery period. Similarly, if the futures seller thinks that due delivery is not good for him, he can also buy stock futures contracts with the same delivery period before the delivery period. In fact, most futures contracts have fulfilled their obligations by offsetting before they expire.
What are the advantages of stock futures trading?
Advantages of stock futures trading:
First, the transaction cost is low. Each stock futures contract is equivalent to the value of several dry stocks, and the commission for buying and selling contracts is determined according to a certain proportion of the contract value, so the transaction cost is very low compared with the contract value.
Second, it is convenient to short the stock. Because investors can easily sell stock futures, when the market falls, investors can make a profit by shorting stock futures.
Third, the leverage effect. When buying and selling stock futures contracts, investors only need to pay a small portion of the face value of the contract, which makes the transaction more cost-effective.
Fourth, reduce the foreign exchange risk of overseas investors. Stock futures contracts provide overseas investors with a way to invest in local outstanding stocks, because buying and selling stock futures only requires a margin, not the full contract value, thus greatly reducing the foreign exchange risks that overseas investors have to bear.
Well, that's the introduction of the significance and advantages of stock futures trading, and that's all I shared today, hoping to help you better understand stock futures trading.