1. Is it risky to speculate in spot crude oil?
The risk of misjudging the market outlook. An important feature that distinguishes spot trading from stock trading is that there is a short-selling mechanism in the spot, that is to say, there are opportunities for profit regardless of the spot's ups and downs, provided that we judge the market outlook accurately. The market outlook here can be a few minutes or hours after entering the market.
In a few days or weeks, the result of misjudgment is the loss of funds.
2. The risk of wrong admission time. The so-called risk of wrong timing means that investors may lose money when they enter the market because of wrong timing, even if they judge the late megatrend accurately, which will have a negative impact on operational psychology.
3. The risk of overweight positions. The margin system of spot trading determines that the profit and loss of spot trading is effectively enlarged. If you use 20% of the funds to buy a commodity spot contract with a value of 100%, the profit and loss may far exceed the deposit in your account before opening the position. This is the risk and charm of spot trading.
4. The risk of holding positions overnight. The short-term spot price of commodities fluctuates violently, and the price continuity is poor, so it is often possible to go high and low. If the price of your position moves in a direction that is not conducive to your position after overnight, it will cause you a big floating loss at the opening moment.
What's the difference between futures and spot?
What's the difference between futures and spot? Simply put, the spot has no delivery date and can be bought and sold at any time. Futures have a delivery date, which means one or several days. Futures have a time limit.
1. Direct buyers and sellers are different. The direct object of spot trading is the commodity itself, including samples, objects and pricing. The direct object of futures trading is futures contracts, not how many contracts to buy or sell.
2. The purpose of the transaction is different. Spot transaction is the transaction of primary currency and primary commodities, and it is a direct means to meet the needs of buyers and sellers by obtaining or transferring the ownership of commodities immediately or within a certain period of time. Generally speaking, the purpose of futures trading is not to obtain physical objects at maturity. The purpose of hedgers is to transfer the price risk in the spot market through futures trading, and the purpose of investors is to obtain risk profits from price fluctuations in the futures market.
3. Different trading methods.
Spot transactions are generally one-on-one negotiations to sign a contract, and the specific content is agreed by both parties. If the contract cannot be fulfilled after signing, it will be resorted to law. Futures trading is conducted in an open and fair manner. One-on-one negotiation (or private hedging) is considered illegal.
4. trading places is different. Spot trading is generally not limited by trading time, place and object, flexible and convenient, and can be traded with opponents at any place. Futures trading must be conducted in an open and centralized manner in the exchange according to law, and cannot be traded over the counter.
5. The range of goods is different. The varieties of spot trading are all commodities in circulation, while the varieties of futures trading are limited. Mainly agricultural products, petroleum, metal commodities and some primary raw materials and financial products.
6. Different settlement methods. Spot trading is cash on delivery, no matter how long it takes, it is a settlement or several settlements. Futures trading adopts a daily debt-free settlement system, and profits and losses must be settled daily. The settlement price is calculated according to the weighted average of transaction prices.