Short selling is signing a sales contract with others. After the transaction, the seller closes his position, that is, he closes his position with the original contract opponent (the person who signed the purchase contract is not necessarily the same person) by cash settlement, or transfers the sold contract to others, that is, the seller closes his position, or the buyer closes his position, or someone takes over his sales contract. In the future, if the buyer does not close the position, he can find a new customer to take over the sale contract for settlement or delivery.
The following is for reference: Take shorting wheat as an example to explain the principle of shorting futures:
When the price of wheat is 2000 yuan per ton, it is estimated that the price of wheat will fall. You signed a (first-class) contract with the buyer in the futures market, for example, you agreed to sell him 10 ton of standard wheat at a price of 2000 yuan per ton at any time within six months. (the value is 2000× 10 = 20000 yuan, calculated in 600 yuan. )
This is short selling (selling open positions). In practice, you are selling open wheat futures contracts.
Why should a buyer sign a contract with you? Because he's awesome.
When signing a contract, you don't necessarily have wheat in your hand (generally you don't really want to sell wheat). If you observe the market, the market drops to 1.800 yuan per ton. You buy 10 ton of wheat at the market price of 1.800 yuan per ton and sell it to the buyer at the contract price of 2,000 yuan per ton. The contract is completed.
(2000-1800) ×10 = 2000 (yuan)
In fact, people often hedge contracts (cancel contracts) by buying and closing positions, earning the same income as physical delivery, and avoiding complicated procedures and expenses during physical delivery.
At this time, you only need 2000 yuan to sell a hand of wheat, 1800 to buy a flat, which is very convenient.
After the futures are opened, they can be closed at any time before the delivery date, or they can be bought and sold multiple times on the same day (generally, there is no handling fee for closing positions on the same day). If the price of wheat rises within half a year, you have no chance to buy low-priced wheat to close your position, you will be forced to buy high-priced wheat to close your position (the contract must be closed at the expiration), you will lose money, and the buyer who signed with you will make a profit.
If you close your position at 2200, you will lose money:
(2200-2000)× 10=2000 (yuan)+6 yuan handling fee.
The buyer (not specified) who signed the contract with you earned 2000 yuan (the handling fee was ignored).
Futures account: Sign (or transfer) a sales contract with others;
Futures liquidation: it is to cancel (or transfer out) the trading contract with others.