Learn about futures in one minute

Futures is a concept relative to spot. Strictly speaking, futures are not commodities, but standardized commodity contracts. Futures contract: a standardized contract made by a futures exchange to deliver a certain quantity and quality of goods at a specific time and place in the future. The purpose of futures trading is to transfer price risk or gain risk profit.

What are the advantages of futures trading?

1. Margin trading: investors can conduct futures trading as long as they use 5%~ 10% margin;

2. Two-way trading and hedging mechanism: two-way trading, that is, futures traders can buy futures contracts as the beginning of futures trading (called buying positions) or sell futures contracts as the beginning of trading (called selling positions), commonly known as "short selling". 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.

3. Trading method: t+0 trading, and countless transactions can be made on the same day.

How big is the development space of the futures market?

(1) The function of avoiding price risk. The most prominent function of the futures market is to provide producers and operators with means to avoid price risks. That is, producers and operators hedge their futures markets to avoid the risks caused by price fluctuations in spot trading, lock in production and operation costs and realize expected profits. In other words, the futures market makes up for the shortage of the spot market.

(2) Price discovery function. Under the condition of market economy, prices are formed according to market supply and demand. Traders from all directions in the futures market have brought a lot of supply and demand information, and the transfer of standardized contracts has increased market liquidity. The price formed in the futures market can truly reflect the supply and demand situation, and at the same time provide a reference price for the spot market, which plays the role of "discovering prices".

(3) Conducive to market supply and demand and price stability.

(4) Save transaction costs. The futures market provides a safe, accurate and fast trading place for traders, improves trading efficiency, avoids the occurrence of "triangle debt", and is conducive to the establishment and perfection of market economy.

(5) Futures trading is an important investment tool, which helps to make rational use of social idle funds.

Investment, if you want to do it, you must be stable.