The essence of futures is to sign long-term contracts with others to buy and sell goods (or stock indexes, foreign exchange, interest rates) in order to achieve the purpose of maintaining value or making money.
If you think the futures price will go up, go long (buy and open positions), go up (sell) and close positions, and earn: price difference = close positions-open positions.
If you think the futures price will fall, short (sell the position), fall (buy) and close the position, and earn: price difference = opening price-closing price.
Let's take long wheat as an example (the buyer doesn't necessarily want the goods when signing the purchase contract) to illustrate the principle of long futures:
When the price of wheat reaches 2000 yuan per ton, it is estimated that the price of wheat will go up. You signed a contract with the seller's house in the futures market. (For example, it is agreed that you can buy his 10 ton standard wheat at any time within half a year at a price of 2,000 yuan per ton. (The value is 2000× 10 = 20000 yuan, press. )
This is a long position (buying and opening positions). In practice, you buy an open wheat futures contract.
Why should the seller sign a contract with you? Because he is bearish.
When signing a contract, you don't have to buy wheat. You are observing the market. If the market rises to 2200 yuan per ton as you wish, you buy 10 ton of wheat at 2000 yuan per ton (as agreed in the contract) and sell it at 2200 yuan per ton in the market, and the contract is fulfilled (your performance bond is returned to you). You will get:
(2200-2000)× 10=2000 (yuan) (the handling fee is generally 10 yuan, which is ignored).
This is profit liquidation. In practice, you are selling a futures contract of primary wheat.
The seller who signed the contract with you needs to buy wheat at the price of 2200 yuan in the market and sell it to you at the price of 2000 yuan (performance), with a loss of 2000 yuan per lot (10 ton) (excluding the handling fee).
The whole operation, you only need 2000 to buy a hand of wheat and 2200 to sell it, which is very convenient.