Regarding the nature of futures trading, I think it is necessary to think about the nature of the futures market first.
Mr. Jacky Jiang clearly pointed out that the futures market is a risk transfer market and a risk management market. Its function and function are essentially different from those of the banking market and the stock market.
The banking market is a market with indirect financing function; The stock market is a market dominated by direct financing. Their role in the real economy mainly lies in the financing function. The stock market also has the function of valuation and pricing.
But the futures market is completely different. The futures market has two well-known functions-price discovery and risk transfer.
Although the price discovery function also supports the supply of the real economy. But it is not as widely understood as the financing function.
Similarly, the risk transfer function is the same.
For the vast number of participants in the real economy, the futures market can pass on the price risk in its own business process. But to whom?
Those who accept these risks are called speculators in the futures market.
Speculators' performance in the market is to earn spread profits through price games. This is generally understood by society as gambling.
Formally, speculators buy and sell prices. But in essence, speculators are actually buying and selling risks!
Earn profits in the risk exchange process by buying and selling the risks transferred by others. This is the essence of speculators in the futures market.
Imagine that if no one in the real economy is worried that they will face price risks in their operations, then there will be no demand for risk transfer, no transaction process of risk transfer, and naturally there will be no living space for speculators.
Therefore, from this perspective, the planned economy system does not need the futures market. But obviously, the vitality of commodity economy is stronger. Because the planned economy reduces the risks of economic participants at the micro level, it accumulates and superimposes such risks at the macro level. Although the commodity economy exposes economic participants to price risk at the micro level (if the price risk is not well managed, there will be bankruptcy risk), it has a better life at the macro level (although there will be problems at the macro level, it will still be repaired within its own framework). Just like illness will heal. The potential for recovery from the planned economy is much smaller).
From this perspective, the futures market is for micro-participants in the real economy. Let them sell the risk. These risks are uncertain for the entity operators. In other words, even they don't know whether the price will fluctuate in an unfavorable direction. For example, the price of raw materials rises or the price of products falls. So what can I do? Of course, we must sell risks and lock in profits. Although it sacrifices the potential to earn more, it avoids the possibility of loss.
What about speculators? Can buying and selling risks make money?
This is a problem. Risk is called risk because of its uncertainty. If it is confirmed, it is called profit. Entity enterprises are stupid. He sold the profits! !
Of course, another possibility is that the entity knows that the risk is a loss, so it sells it. Are speculators stupid? If you sell everything that is packaged as risk, who will buy it if you open it at a loss?
Moreover, as a participant in the real economy, does he really have the ability to sell only losses and not profits?
I think this is not in line with the logic of the objective world.
The logic of the objective world should be: the future is uncertain. Entity companies don't know what will happen in the future. So he doesn't know whether the risk he packaged and sold represents profit or risk!
Therefore, from an objective point of view, no one can know in advance whether the "blind box" packaged as risk contains profits or losses.
Speculators only buy this kind of "blind box" that is fully estimated and packaged into risks.
Then, if we are speculators, our starting point is how to master the skills of guessing what is in the "blind box". So what do you think are the chances of success?
Therefore, I think it is better to do the opposite. In other words, we might as well set our thinking to "What should we do if the' blind box' contains risks".
Then, the result will be that if the "blind box" contains risks, we are not afraid; And if the "blind box" is full of profits, we are even more afraid.
Therefore, my summary is:
1. The essence of the futures market is risk transfer and risk management;
2. Based on the first point, my trading idea is not how to operate correctly, but how to operate without dying in the wrong situation.