What are the main sources of risks in the futures market?
Futures market risks come from many aspects. From the analysis of the origin and characteristics of futures business, the risk causes mainly include price fluctuation, leverage effect of margin trading, non-perceptual profits of business operators and imperfect market mechanism.
1 leverage effect
Under the condition of market economy, commodity prices are affected by the relationship between supply and demand. For consumers and operators of commodities, the unpredictability of price fluctuations increases the instability of consumption and operation, and the unique operating mechanism of futures market is likely to lead to frequent price fluctuations and breed high risks.
2 Price fluctuation
Futures business experimental margin system, business operators only need to pay a certain proportion of futures contract margin to start business, and the margin ratio is usually 5% ~ 10% of futures contract value as contract guarantee. This small and extensive high leverage effect not only attracts the participation of many profit-seekers, but also reduces the original risk of price bumps. A small increase in prices may cause large business owners to lose a small amount of profits. When market conditions deteriorate, they may be unable to pay huge losses and default. The leverage effect of futures business is different from other investments in futures knowledge, and it is also the main reason for the high risk in futures market.
3 Non-perceptual profit
Profiteers are an indispensable part of futures trading. They are not only the undertakers of price risk, but also the participants of price invention, which not only ensures the formation of fair price, but also improves market liquidity. However, in the environment of imperfect risk management system and lax experiments, profit-seekers are driven by strength, and it is easy to take advantage of their own strength and status to hold law-abiding and illegal acts such as market manipulation. This behavior not only disturbs the normal order of the market, distorts the price and affects the function of price invention, but also causes unfair competition and infringes on the futures knowledge of other business personnel.