Futures trading is standardized by buying and selling futures contracts. The standardization of futures contracts means that all terms of futures contracts except price are stipulated by futures exchanges in advance, which has the characteristics of standardization. The standardization of futures contracts has brought great convenience to futures trading, and both parties need not negotiate on the specific terms of the transaction, which saves trading time and reduces trading disputes.
Second, the concentration of transactions.
Futures trading must be conducted in a futures exchange. The futures exchange implements the membership system, and only members can enter the market for trading. Those off-site customers can only entrust trading agents, that is, futures brokerage companies to participate in futures trading. Therefore, the futures market is a highly organized market, and strict management system is implemented, and futures trading is finally completed in the futures exchange.
Three, two-way trading and hedging mechanism
Two-way trading, that is, futures traders can buy futures contracts as the beginning of futures trading, or sell futures contracts as the beginning of trading, commonly known as "short selling". There is also a hedging mechanism associated with the characteristics of two-way trading. In most futures trading, when the contract expires, it is not fulfilled by physical delivery, but by trading in the opposite direction to the opening direction. Specifically, after buying a warehouse, you can cancel the performance responsibility by selling the same contract, and after selling a warehouse, you can cancel the performance responsibility by buying the same contract.
The characteristics of two-way trading and hedging mechanism of futures trading attract a large number of futures speculators to participate in trading, because speculators have double profit opportunities in the futures market. When futures prices rise, they can buy low and sell high to make a profit. When prices fall, they can make profits by selling high and buying low, and speculators can avoid the trouble of physical delivery through hedging mechanism. The participation of speculators has greatly increased the liquidity of the futures market.
Fourth, the leverage mechanism.
Futures trading implements the margin system, that is to say, traders need to pay a small amount of margin when trading futures, which is generally 5%- 10% of the contract value, so that they can complete several times or even dozens of times of contract transactions. This feature of futures trading attracts a large number of speculators to participate in futures trading. One of the characteristics of futures trading is that it can make a big investment with little money, which is vividly called "leverage mechanism". The leverage mechanism of futures trading makes futures trading have the characteristics of high returns and high risks.
Verb (abbreviation of verb) daily debt-free settlement system
Futures trading adopts the daily debt-free settlement system, that is, after the end of each trading day, the profits and losses of traders on that day are settled, and funds are transferred between different traders according to the profits and losses. If the trader suffers serious losses and the funds in the margin account are insufficient, he is required to add margin before the market opens the next day to realize "no debt on a daily basis". The futures market is a high-risk market. In order to effectively prevent risks, the risks brought by adverse changes in futures prices to traders should be controlled within a limited range, thus ensuring the normal operation of the futures market.