When buying or selling physical objects, selling or buying the same amount of futures in the futures market, after a period of time, when the price changes make the spot transaction profitable or loss, the loss in futures trading can be offset or compensated. Therefore, hedging mechanisms are established between "now" and "period" and between short-term and long-term to minimize price risk.
Various expenses incurred by commodities in the field of circulation. It constitutes the necessary cost of social reproduction process. Futures trading is an advanced trading method based on spot trading and forward contract trading. Therefore, futures trading has the function of saving the cost of commodity circulation.
Extended data:
Transaction characteristics
1, contract standardization
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.
2. Centralized trading
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.
3. 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".
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