Futures trading is a standardized contract trading method of buying and selling all kinds of physical goods or financial goods on the futures exchange after paying a certain margin. Futures traders generally buy and sell futures contracts through futures brokerage companies. In addition, the obligations they have to undertake after buying and selling the contract can be relieved by reverse trading (hedging or liquidation) before the contract expires.

Futures trading is an inevitable product of the development of market economy to a certain stage.

Futures trading is developed from forward contract trading in spot trading. In the forward contract transaction, traders gather in the commodity exchange to exchange market information, find trading partners, sign the forward contract through auction or negotiation between the two parties, and when the contract expires, both parties end their obligations by physical delivery. In frequent forward contract transactions, traders find that there is a price difference or interest difference in the contract itself due to the fluctuation of price, interest rate or exchange rate, so they can make profits by buying and selling contracts without waiting for physical delivery. In order to adapt to the development of this business, futures trading came into being.

2. Why do you want to engage in futures trading?

Most people set foot in the futures market for the first time and started futures trading purely for making money. In their view, futures trading is a way to get rich quickly, and it is an investment tool that requires little start-up capital and may get huge profits. Unfortunately, the risk of futures trading and the extremely low probability of success have shattered many people's illusions. Because of the risks in futures trading, a question naturally arises: "Why do you want to participate in futures trading?" This is a good question, and anyone must find a satisfactory answer to it before becoming a futures trader. Perhaps, you will find some meaningful answers as follows:

1. If you can clearly understand the risk of loss in trading and have the ability to succeed and make unremitting efforts for it, futures trading will provide you with a way to make a living leading to huge wealth.

2. The futures industry is developing, which provides a variety of employment opportunities for people. If you lack interest or passion in pure speculation, then you choose a career related to futures trading, such as brokerage, market analysis, accounting, computer and so on. Before you engage in any work related to futures trading, you must know and understand futures trading.

In many ways, the futures market is the leading economic index. They can tell you the status quo of many things and predict their future trends. Understanding the current situation of the futures market means understanding the economy. And these are good for your other investments, whether long-term or short-term.

Learning how to trade futures can help you improve your quality and ability in other investment fields.

If you decide to enter the futures market to engage in speculation, you should always remember that in futures trading, risks and benefits coexist. Although the return is extremely attractive, the concept that the loss in futures trading may exceed the initial investment should be at the top of your mind.

3. What are the characteristics of futures trading?

Although futures trading developed from spot trading, it has been thoroughly remoulded and formed its own unique style.

1. Small and wide. Futures trading only needs to pay 5- 10% performance bond, and it can complete several times or even dozens of times of contract transactions. Due to the leverage effect of the futures trading margin system, it has the characteristics of "small and wide", and traders can make large transactions with a small amount of funds, saving a lot of liquidity and attracting many traders to participate.

2. facilitate transactions. In the futures market, standardized contracts are bought and sold, and only the price is the variable factor. This standardized contract can be used as an "abstract commodity" to represent physical goods, but as a trading unit, the goods themselves do not enter the market. The standardization of contracts improves the interchangeability and liquidity of contracts, and it is very convenient for contracts to end their obligations through hedging. Therefore, traders can day trading and create many profit opportunities.

3. Don't worry about the performance. All futures transactions are settled through the futures exchange, which becomes the counterparty of any buyer or seller and provides guarantee for each transaction. So traders don't have to worry about the performance of the transaction.

4. Market transparency. Trading information is completely open, and trading is conducted by means of open bidding, so that traders can compete openly under equal conditions.

5. Tight organization and high efficiency. Futures trading is a standardized transaction with fixed trading procedures and rules, which are linked one by one and operate efficiently. A transaction can usually be completed in a few seconds. With the internationalization of futures trading, traders can participate in international competition very conveniently.

Therefore, for producers, processors, importers and exporters, middlemen and other spot traders, they can sign standardized forward contracts with the exchange through the intermediary of brokerage companies. In order to ensure performance, exchanges and brokerage companies require buyers and sellers to pay a certain level of deposit in advance. When commodity prices change in an unfavorable direction, in order to prevent one party from defaulting, they are required to raise the level of deposit in time to ensure performance.

On the other hand, due to the frequent fluctuation of commodity prices, speculators are provided with many opportunities to buy low and sell high, or sell high and buy low, and profit from the price difference, which is very similar to the stock investors' profit from the rise and fall of stock prices. Futures investment can not only buy at a low price and sell at a high price for profit, but also sell short when there is no goods in hand and buy back for profit when the price falls, similar to stock short selling. Due to the two-way nature of futures investment, there are more investment opportunities and more corresponding speculation. At the same time, because futures investment can be fully traded with a margin of 5- 10%, which is equivalent to the operation of stock investment overdraft 10-20 times, if the market situation is judged correctly and the trading strategy is appropriate, there will be quite high returns, but at the same time the trading risk will be enlarged accordingly. It is precisely because of the two-way and highly leveraged investment characteristics of futures investment that futures, stocks and real estate are called the three major investment tools in the world and enjoy the reputation of "king of investment" in Europe and America.

4. The difference between futures trading and spot trading

Spot transaction refers to the transaction mode in which buyers and sellers fulfill their delivery and payment obligations immediately after the transaction is completed. Different from futures trading, the variety, quality and quantity of commodities are not standardized. Futures trading refers to the trading behavior of reaching a contract on an exchange, which is bound by law and stipulates that a specific commodity will be delivered at a specific place and time in the future. Futures contracts are standardized, and there are unified regulations on the grade, quantity, delivery date and delivery place of commodities.

5. What is the difference between futures trading and stock trading?

Futures has always been regarded as the riskiest investment product. Do most investors have enough ability to participate in futures investment? What's the difference between stocks and futures? Let's compare stocks and futures from different angles.

Futures is just a standardized contract. The terms in the contract are all agreed in advance, and there is only one variable factor-price. Futures trading is essentially the trading of standardized futures contracts. For example, if you buy a soybean forward contract of 0309, if you hold it until the last trading day stipulated in the contract, it means that 10 ton of soybeans meeting the standards of Dalian Commodity Exchange will be delivered to investors during the delivery period in September 2003. Similarly, if you buy a short-term soybean contract and hold it until the last trading day, it means that investors must deliver 10 tons of qualified soybeans to Dalian Commodity Exchange within the specified time. Of course, investors don't have to worry about the lack of physical delivery. Because this kind of transaction can be completed by hedging after buying and selling or after selling, there is no need for physical delivery. In fact, 99% of futures trading is done in this way.

Stock is a kind of securities issued by a joint-stock company to shareholders to prove that they hold shares and get dividends and bonuses from it. Shareholders cannot withdraw their shares, but they can transfer them. Therefore, as long as the joint-stock company does not go bankrupt and liquidate, the effectiveness of the stock is long-term. Simply put, investors can always hold stocks, but futures are contracts with a time limit, and they must be delivered and liquidated at maturity, so it is impossible to hold them for a long time like stocks. Investors in the futures market can indirectly achieve the effect of long-term holding through monthly trading. The so-called monthly exchange transaction refers to the way that contracts in different months are bought and sold at the same time or sold and bought at the same time in the futures market, and the recent contracts are converted into forward contracts to continue holding.

Because there are many similarities between stock and futures investment in trading methods, trading means and analysis methods, stock investors are indeed more likely to accept futures as an investment tool. For example, the technical analysis methods familiar to investors are widely used in the futures field, and the K-line chart, wave theory, moving average and technical indicators are basically the same when applied to stocks or futures. But there are obvious differences between them in basic analysis. The fundamental analysis of stocks mainly refers to the analysis of the operating conditions and performance of the companies that issue stocks. Even if it involves the analysis of macro factors, it will eventually return to the judgment of the company's future performance. Therefore, compared with futures, stock investment focuses more on microeconomics, corporate finance, production, supply and marketing; The object of a futures contract is tangible. Once the standard is formulated, it will remain unchanged for a long time. What investors need to worry about is nothing more than the price changes of this commodity and the various relationships that can cause price changes. Because the commodities in commodity futures are generally highly mobile, and the supply may come from all over the world, the price is worldwide. If the price in a certain area is too high or too low, this difference will inevitably be smoothed out through import and export trade. Therefore, the futures price in the international environment is more influenced by various macro factors such as global economy, trade and politics. Compared with stocks, futures prices are much less likely to be manipulated.

From the law of price fluctuation, futures prices are more regular than stock prices. Looking at the trend chart of soybean futures prices in the United States in recent 30 years, we can see that soybean prices are running between 450-800 cents/bushel (165-295 USD/ton) for more than 90% of the time. After all, futures prices are highly correlated with physical prices, and it is impossible to leave the commodity value area for a long time. On the other hand, there are almost no universal valuation standards for stocks. For example, the price-earnings ratio method varies greatly around the world. In the upsurge of network technology, evaluating the price-earnings ratio of network companies doesn't work at all, but once the upsurge recedes, the once unattainable network stocks become worthless. Generally speaking, for a stock investor, the ways and means of industry analysis and technical analysis can be directly extended to futures investment, but to become a mature futures investor, it needs systematic study. In particular, "risk control" is a very important compulsory course in futures investment and the weakest link in stock investment.

As we all know, futures investment is characterized by small bets, and high returns are accompanied by high risks. Futures investment can amplify the leverage effect of profit and loss, which may be the main reason why ordinary investors stay away from it. In fact, the margin system is the charm of futures investment. As we know, stock trading must pay a price of 100%, while futures trading only needs to pay a small amount of margin, generally only 8- 10% of the contract value, so that several times or even dozens of times of contract trading can be completed. The leverage of futures trading can be adjusted, and the initiative is completely in the hands of investors. If investors are unwilling to enlarge the profit-loss ratio too much, they can completely reduce the risk by controlling their positions. For example, only about 10% of the funds are used to buy and sell futures, and the leverage amplification of futures is basically offset, so there is little difference between speculating in futures and speculating in stocks. In fact, investors can selectively use leverage according to their actual situation and the degree of opportunities. The key is whether stock investors who are used to "all in and all out" can resist the temptation of "leverage magic", which stock investors must consider clearly. At present, "overdraft" trading is not allowed in stock investment. When a good market opportunity appears, investors can only use their own capital to operate, and it is impossible to "expand the results." Even if the policy of personal stock pledge loan is introduced, it is difficult for stock investors to use capital leverage as timely and flexibly as futures investment because of the restrictions of stock varieties, financing costs and personal credit.

In the trading system, futures trading has more advantages than stock trading. First of all, futures trading has a short-selling mechanism. And stocks can only be bought first and then sold, and it is a one-way street. When the stock price falls, investors can only accept losses or leave the market to wait and see. The two-way trading system of futures trading provides more market opportunities. You predict that futures prices will rise, and you can do more; If you judge that the price will fall, you can short it. As long as your prediction is accurate and your direction is correct, there will be profit opportunities in both bull and bear markets. Secondly, the handling fee of futures trading is lower than that of stock trading. The current handling fee for futures trading accounts for less than one thousandth of the transaction amount, while the current handling fee for stock trading is generally around five thousandths (including stamp duty), which is five times that of the former; Third, futures trading is more suitable for short-term trading than stock trading. The trading mode of T+0 in the futures market is better than that of T+ 1 in the stock market, and the exchange only charges unilateral handling fees for transactions made on the same day, which further reduces the transaction costs of investors.

The above introduces some basic characteristics of futures trading. Futures investment does have many advantages over stock investment. However, futures investment is a high-risk investment after all, and the corresponding requirements for futures investors are higher. First of all, futures investors must have relevant professional knowledge base and strong risk tolerance and control ability; Secondly, the entry threshold for engaging in futures trading is also high, and the minimum amount of an account opened by a general futures company is 50,000 yuan. In the face of high-risk and high-yield futures market, ordinary investors should think twice before acting and do what they can.

6. What is the futures market?

The futures market is a market for buying and selling futures contracts. The broad futures market includes futures exchanges, clearing houses or settlement companies, futures brokerage companies and investors. The narrow sense of futures market only refers to futures exchanges. The futures exchange is the place to buy and sell futures contracts and the core of the futures market. In the futures market, those who participate in futures trading are producers and operators who transfer the risk of price fluctuation and venture capitalists who bear the price risk to obtain profits. They compete fairly in the futures exchange according to law and are guaranteed by the margin system. The purpose of futures trading is not to obtain physical objects, but to avoid risks or make profits from investment, and generally does not realize the transfer of commodity ownership.

Seven. Basic economic function of futures market

As an advanced form of commodity trading, futures trading plays an important role in economic stability and development.

1. Risk transfer and hedging: Due to changes in natural and human factors, commodity prices will fluctuate, which will often have an adverse impact on one of the buyers and sellers. For example, in the international market, changes such as drought, flood, war, political turmoil and storms directly affect commodity prices. Individuals or companies with a large number of related commodities will soon find that the value of their inventory has risen or fallen sharply almost overnight. Intense market competition will lead to large price fluctuations in a short period of time. The risk factors related to supply and demand also include the periodicity of demand for some commodities and the seasonality of agricultural products harvest. The potential price risk brought by the unpredictability of supply and demand is inherent in the market economy, and both buyers and sellers can't resist it. In order to transfer the price risk, traders can resell or supplement futures contracts at any time through the futures market, and transfer the price risk to a third party to achieve the purpose of maintaining the value.

2. Discover the price: There are many people who participate in futures trading, and they all trade at the price they think is the most suitable. Therefore, the futures price can comprehensively reflect the expectations of both the supply and demand sides on the relationship between supply and demand and the price trend at a certain time in the future. This kind of price information increases the transparency of the market and helps to improve the efficiency of resource allocation. The price formed in the futures market has become the main reference for producers, operators and investors to make decisions. The prices of copper in Shanghai Futures Exchange and soybean in Dalian Commodity Exchange have become the industry guidance prices at home and abroad.

Eight. Organizational structure of futures market

1. foreign exchange futures

A futures exchange is a place that specializes in trading standardized futures contracts. The organizational forms of futures exchanges are divided into company system and membership system. At present, the futures exchanges in most countries in the world implement the membership system, and the futures trading in China belongs to the membership system. The membership-based futures exchange is not for profit, implements self-discipline management in accordance with the provisions of its articles of association, and bears civil liability with all its property. The main functions of the futures exchange are: providing trading places, facilities and related services; Formulate and implement business rules; Design contracts and arrange listing; Organize and supervise futures trading and delivery; Monitor market risks; Ensure the performance of the contract; Release market information; Supervise the trading behavior of members.

2. Futures brokerage company

A futures brokerage company is an intermediary organization established according to law. It accepts the entrustment of customers, conducts futures trading for customers, and collects handling fees according to customers' instructions. The result of the transaction is borne by the customer. Futures brokerage companies are generally members of futures exchanges, and their main tasks are: to conduct futures trading on behalf of customers; Manage customer profits; Execute the trading instructions issued by customers and record the trading results; Using advanced facilities and technology to provide customers with commodity quotation, trend analysis and related consulting services. Domestic futures brokerage companies must be approved by the China Securities Regulatory Commission and registered with the State Administration for Industry and Commerce before they can obtain the qualification of trading agents.

3. Futures traders

According to the different purposes of participating in futures trading, futures traders are divided into hedgers and speculators.

Nine. Basic system of futures market

1. 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.

2. Daily settlement system

The settlement of futures trading is organized by the exchange. The futures exchange implements a daily debt-free settlement system, also known as "marking the market day by day", that is, after the daily trading, the exchange will settle the profits and losses, trading deposits, handling fees, taxes and other expenses of all contracts according to the settlement price of the day, and at the same time transfer accounts receivable and accounts payable, and increase or decrease the settlement reserve of members accordingly.

The settlement of futures trading is classified, that is, exchange settlement members and futures brokerage companies settle customers.

3. Price limit system

The price limit system, also known as the daily maximum price fluctuation limit, means that the trading price fluctuation of futures contracts in a trading day should not be higher or lower than the specified price fluctuation range, and the quotation exceeding this price fluctuation range will be regarded as invalid and cannot be traded.

4. Position restriction system

The position limit system refers to the system that the futures exchange restricts the number of positions held by 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.

5. Extended family 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.

6. 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.

7. Compulsory liquidation system

The compulsory liquidation system refers to the compulsory liquidation system implemented by the exchange to prevent further risk expansion when the trading margin of members or customers is insufficient and not replenished within the specified time, or when the positions of members or customers exceed the specified limit, or when members or customers violate the rules. Simply put, it is a compulsory measure for the exchange to close the position of the violator.

X. What are the futures trading varieties?

Futures listed varieties refer to the subject matter of futures contract transactions, such as wheat, soybeans, copper, aluminum, natural rubber and so on. Not all commodities are suitable for futures trading. Among many physical commodities, only commodities with the following attributes can be listed as futures contracts:

First, the price fluctuates greatly. Only when commodity prices fluctuate greatly, traders who intend to avoid price risks need to use forward prices to determine prices first. For example, some commodities are subject to monopoly prices or planned prices, and the prices are basically unchanged. There is no need for commodity operators to use futures trading to avoid price risks or lock in costs.

Second, the supply and demand are large. The function of the futures market is based on the extensive participation of both the supply and demand sides of commodities. Only goods with large spot supply and demand can fully compete in a wide range and form authoritative prices.

Third, it is easy to classify and standardize. The quality standard of the delivered goods is stipulated in the futures contract in advance. Therefore, futures varieties must be commodities with stable quality, otherwise, it will be difficult to standardize.

Fourth, it is convenient for storage and transportation. Commodity futures are generally forward delivery commodities, which requires these commodities to be easy to store, not easy to deteriorate and easy to transport, so as to ensure the smooth delivery of futures.

According to the types of transactions, futures trading can be divided into commodity futures and financial futures. Commodity futures with physical commodities as futures varieties, such as soybeans, corn, wheat, copper, aluminum, etc.; Financial products, such as exchange rate, interest rate and stock price index. , are all financial futures. Generally, there are no quality problems in financial futures, and most of them are settled by cash and price difference. At present, China only conducts commodity futures trading, and the listed varieties mainly include copper, aluminum, soybeans, wheat and natural rubber.

XI。 What is a futures contract?

Speaking of contracts, people naturally think that contracts are just a piece of paper with numbers printed on it. It is true that futures contracts do involve a lot of documents and paperwork, but futures contracts are not a piece of paper. A futures contract is a legally binding agreement reached through a futures exchange, that is, a contract to buy or sell a commodity in the future. Expressed in terms, a futures contract refers to a standardized contract made by a futures exchange, which promises to deliver a certain quantity and quality of physical or financial goods at a specific time and place in the future. The standardized terms of futures contracts generally include:

(1) Transaction quantity and unit terms. The futures contract of each commodity stipulates a unified and standardized quantity and unit of quantity, which are collectively called "trading units". For example, Dalian Commodity Exchange stipulates that the trading unit of soybean futures contract is 10 ton. That is to say, when you buy and sell soybean futures contracts on Dalian Commodity Exchange, you should start with 10 ton, which is 1 lot as far as the futures market is concerned, and it is the smallest trading unit. You can't buy 5 tons or sell 8 tons of soybeans in the futures market.

(2) Quality and grade terms. Commodity futures contracts stipulate unified and standardized quality grades, and generally adopt the commodity quality grade standards formulated by the state. For example, the soybean futures delivery standard of Dalian Commodity Exchange adopts the national standard.

(3) Terms of delivery place. Futures contracts specify a standardized and unified delivery warehouse for the physical delivery of futures transactions to ensure the normal delivery of physical objects. Dalian is one of the important grain distribution centers in China, and its warehousing industry is very developed. At present, the designated delivery warehouse of Dalian Commodity Exchange is located in Dalian.

(4) delivery terms. The commodity futures contract specifies the month of physical delivery. At the beginning of commodity futures trading, the first thing you notice is that each commodity has several different contracts, and each contract represents a certain month, such as 1999 1 1 soybean contract, and soybean contract in May 2000.

(5) the lowest price change clause. Refers to the minimum allowable range of changes in the quotations of buyers and sellers in futures trading. The price change of each quotation must be an integer multiple of the minimum change price. The minimum change price of soybean futures contract in Dalian Commodity Exchange is 1 yuan/ton. In other words, when you buy and sell soybean futures, it is impossible to have a price of 2 188.5 yuan/ton.

(6) Price restriction clauses. The transaction price of a futures contract on a certain trading day cannot be higher or lower than the settlement price of the previous trading day. For example, Dalian Commodity Exchange stipulates that the price limit of soybean futures is 3% of the settlement price of the previous trading day.

(7) Terms of the last trading day. Refers to the deadline for futures contracts to stop trading. Every futures contract has a certain month limit. On a certain day in the contract month, the trading of the contract will be stopped and the physical delivery will be prepared. For example, Dalian Commodity Exchange stipulates that the last trading day of soybean futures is the tenth trading day of the contract month.

12. How to buy and sell futures contracts?

The whole process of futures trading can be summarized as opening positions, holding positions, closing positions or physical delivery.

Opening a position means that a trader newly buys or sells a certain number of futures contracts. For example, you can sell 10 soybean futures contracts. When this transaction is your first transaction, it is called opening a position. In the futures market, buying and selling a futures contract is equivalent to signing a forward delivery contract. An open contract after opening a position is called an open contract or an open contract, also known as a position. When opening a position, the position held after buying a futures contract is called a long position, referred to as a long position; The positions held after selling futures contracts are called short positions, referred to as short positions.

If the trader keeps the futures contract until the end of the last trading day, he must settle the futures transaction through physical delivery. However, only a few people make physical delivery. About 99% market participants choose to sell the futures contracts they bought or buy back the futures contracts they sold before the end of the last trading day, that is, hedge the original futures contracts through the same number of futures transactions in opposite directions, so as to close the futures transactions and relieve the obligation of physical delivery at maturity. For example, if you sold 65,438+00 lots of soybean contracts in May 2000, you should buy 65,438+00 lots of the same contract to hedge your position before the contract expires in May 2000. In this way, a transaction is over as soon as it is even. It's just like financial accounting. Once the same amount of money goes in and out, the account will be balanced. This behavior of buying back a sold contract or selling a bought contract is called liquidation. After opening the position, traders can choose two ways to close the futures contract: either choose the opportunity to close the position or reserve it for physical delivery on the last trading day.

Futures traders may gain or lose money when buying and selling futures contracts. So, from the perspective of traders themselves, what kind of transactions are profitable? What kind of transaction is a loss? Please look at an example. For example, you choose to buy and sell soybeans 1 contracts. You sell the 1 hand soybean contract for delivery in May next year at the price of 2 188 yuan/ton. At this time, your trading position is called "short position" Now you can say that you are a "short seller" or that you are shorting the 1 hand soybean contract.

When you become a bear, you have two choices. One is to keep short positions until the contract expires. At the time of delivery, you buy 10 tons of soybeans in the spot market and submit them to the buyer of the contract. If you can buy soybeans at a price lower than 2 188 yuan/ton, you can make a profit after delivery; On the contrary, if you buy at a price higher than 2 188 yuan/ton, you will lose money. For example, if you spend 2238 yuan/ton on soybean delivery, then you will lose 500 yuan (excluding transaction and delivery costs).

As a short position, your other option is to hedge your position when the soybean futures price is favorable to you. In other words, if you are a seller (short), you can buy the same contract, become a buyer and close your position. If this confuses you, you can think about what you did when the contract expired: you bought soybeans from the spot market to make up for the short position and submitted them to the buyer of the contract, which is essentially the same. If you are short and long at the same time, the two cancel each other out, and you can leave the futures market. If you take 2 188 yuan/ton as a short position and 2058 yuan/ton as a long position to repurchase the original selling contract, then you can earn 1300 yuan (excluding transaction costs).

Thirteen. What is a hedging transaction?

Hedging refers to using the law that spot and futures prices tend to move in the same direction, following the principle of "equilibrium relative", buying (or selling) futures contracts in the futures market with the same number as the spot market but in the opposite direction, so as to use the profits of one market to make up for the losses of another market and avoid the risk of price fluctuation when the price fluctuation direction is unclear.

Fourteen Speculation in the futures market

Futures speculation refers to the futures trading behavior in the futures market for the purpose of obtaining the spread income. Speculators make a decision to buy or sell according to their own judgment on the trend of futures prices. If this judgment is the same as the market price trend, speculators can get speculative profits after closing their positions. If the judgment is contrary to the price trend, the speculator will bear the speculative loss after closing the position. Because the purpose of speculation is to earn differential income, speculators generally just close their positions and settle futures transactions without physical delivery.

Speculative trading can increase market liquidity and bear the risks transferred by hedgers in the futures market, which is conducive to the smooth progress of futures trading and the normal operation of the futures market. It is one of the important conditions for the futures market to play its hedging function and price discovery function. In addition, moderate futures speculation can reduce price fluctuations. Speculators always try to make profits by correctly judging and forecasting the future price when trading futures. When the supply exceeds demand in the futures market, the market price is lower than the equilibrium price, and speculators buy contracts at low prices, thus increasing demand, making futures prices rise and supply and demand tend to balance again; When the futures market is in short supply and the market price is higher than the equilibrium price, speculators will sell contracts at high prices, thus increasing the supply, making the futures price fall and the supply and demand tend to balance again. It can be seen that futures speculation has played a great role in narrowing the range of price fluctuations.