Price discovery is a process in which the supply and demand sides openly bargain in the futures market, constantly update the commodity price level and spread to the world through fierce competition, thus making the commodity price become the world price.

According to the rules of futures trading, all contracts must be bought and sold through public bidding in the trading hall of the futures exchange, and private trading is not allowed, which makes all futures contracts bought and sold through competition, thus making the futures market an open and freely competitive market.

The futures price thus obtained can accurately reflect the real supply and demand situation and its changing trend. Competitive price information in futures markets around the world is constantly spreading and influencing each other, thus forming a worldwide competitive price.

Extended data:

The price formed through futures trading has the following characteristics:

1, prejudge

Futures price has the function of predicting the future supply-demand relationship and its price change trend.

2. Continuity

Futures price is a price that continuously reflects the relationship between supply and demand and its changing trend.

Step 3 make it public

Futures prices are achieved through open competition on exchanges. According to the information disclosure system of the futures market, all transactions and prices reached in the futures exchange must be reported to the members in time and made public.

4. Authority

References:

Baidu encyclopedia-price discovery