It involves market structure, market behavior, market information, futures market and risk management. Price discovery is not confused with general price decision. "Price discovery is an important economic function of the futures market, and it is also the basis for the existence and development of the futures market.
The transaction price formed by open bidding between buyers and sellers in the futures market is authoritative and advanced, which is a comprehensive reflection of different traders' understanding of the relationship between market supply and demand and their expectations for the future market. Futures prices also have a strong persistence. Compared with spot prices that reflect some intermittent points, futures prices can more dynamically reflect the changes in market supply and demand. Because in the futures market, standardized contracts are always bought and sold, traders can constantly revise their original views on the market according to the latest information and form new trading prices.
The price discovery mechanism in the futures market makes the futures price play a more active role than the spot price in the process of social resource allocation, which is conducive to the rational allocation of resources and enables producers, operators, investors and financial institutions to make reasonable production and operation decisions and investment decisions based on this price, thus ensuring the stable development of the economy.