In futures trading, the contract price of the same futures in different months is different, and the spot price of futures is also different. According to these characteristics, we can divide the futures market into forward market and reverse market. What is the difference between forward market and reverse market? Let's get to know each other.

What is the difference between forward market and reverse market?

The difference between the two mainly lies in the opposite of the basis difference and contract price relationship between the distant month and the recent month:

1 active market: an active market refers to a market where the futures price is higher than the spot price, or the contract price in recent months is lower than the forward contract price, and the basis is negative.

2 Reverse market: A reverse market refers to a market where the futures price is lower than the spot price, or the contract price in recent months is higher than the forward contract price, and the basis is positive.

Above, basis refers to the difference between spot price and futures price. Basis is mainly determined by storage fees, transportation fees and transaction fees. When the basis is large or small, it brings investors the opportunity of risk-free arbitrage.