Futures, whose English name is futures, is completely different from spot. Spot is actually a tradable commodity. Futures are mainly not commodities, but standardized tradable contracts based on some popular products such as cotton, soybeans and oil and financial assets such as stocks and bonds. Therefore, the subject matter can be commodities (such as gold, crude oil and agricultural products) or financial instruments.
The delivery date of futures can be one week later, one month later, three months later or even one year later.
A contract or agreement to buy or sell futures is called a futures contract. The place where futures are bought and sold is called the futures market. Investors can invest or speculate in futures.
Position restriction system
The position limit system refers to the system that the futures exchange restricts the positions of members and customers in order to prevent the manipulation of market prices and the excessive concentration of futures market risks on a few investors. If the amount exceeds the limit, the exchange may, as necessary, forcibly close the position or increase the margin ratio.
Main reporting system
The large-sum declaration system means that when the speculative position of a member or customer's position contract reaches more than 80% (inclusive) of the position limit stipulated by the exchange, the member or customer should declare his capital and position to the exchange, and the customer can declare it through the brokerage member. The large household declaration system is another system closely related to the position limit system to prevent large households from manipulating market prices and control market risks.
Physical transmission system
The physical delivery system refers to the system formulated by the exchange. When the futures contract expires, both parties to the transaction transfer the ownership of the goods contained in the futures contract according to the regulations, and settle the open contract.
Margin system
In futures trading, any trader must pay a certain proportion (usually 5- 10%) of the value of the futures contract he buys and sells as the fund guarantee for the performance of the futures contract, and then he can participate in the futures contract trading and decide whether to add funds according to the price change. This system is the deposit system, and the funds paid are the deposit. The margin system not only embodies the unique "leverage effect" of futures trading, but also becomes an important means for the exchange to control the risk of futures trading.