As a trader, you see that the market is divided into two factions now.
The transaction price of the party willing to sell the contract is 3869 yuan/ton, which means that you can get the contract in their hands at this price.
The price acceptable to the party willing to buy the contract is 3865 yuan/ton, and they are willing to buy the contract at 3865 yuan/ton.
At the moment you saw their transaction, both sides were quoted at 3868 yuan/ton. At this time, they made a deal, the buyer bought the contract and the seller sold the contract.
Because of their precedent, the current transaction price is 3868 yuan.
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If you want to buy, there are two ways to choose.
1, if you want to get the contract immediately, then you choose the price of 3868 yuan to buy the contract, because this price is the price that can be traded and the price that the seller is willing to sell;
2. If you insist on buying at the price of 3865, then you can entrust it according to your price, that is, bid 3865 yuan/ton, and see who is willing to sell it to you in the seller's market. In this case, if you want to make a deal, you must have a seller who is willing to sell it to you.
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If you participate in the transaction as a buyer, the increase of the purchase price is related to the increase of your principal, and the decrease of the selling price means your loss, and your principal will also decrease. It is the same for sellers to participate in transactions.
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The futures trading market is your choice as a seller or a buyer, because the trading direction you determine will have an impact on your principal. You are a bull (buy up or buy down), which is your expectation of commodity price increase. Once the commodity price goes up, the contract price of your commodity will go up, and you will make a profit from the price increase.
If you see that the price may fall, then you can short (buy or sell), and the price drop MINUS the price you sell is your profit. This situation can be vividly explained as that you sold some goods to others at a predetermined price (you have already got the payment from the other party), and you found cheaper goods in the market for buyers. At this time, you bought the goods at a lower price and gave them to your customers. What you earn is the difference between the scheduled price and the actual price.
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