Question 2: What do you mean by opening a position?

Open contracts refer to the number of contracts held by multiple parties or shorted by short sellers in a specific market at the end of a trading day. Represents the number of contracts existing in the market at that time, and the open position is equal to the long or short office position.

In the stock market, as long as the company continues to go public, its shares can continue to trade. On the other hand, futures and options are contracts for future delivery, and their trading will be terminated at a certain time.

Buyers and sellers of futures or options must wait until the first notice date if they want to accept delivery or make delivery (this is not necessarily the case with options, but mostly with index options). This waiting period can ensure that the number of long and short contracts must be equal.

However, traders in futures and options rarely want to accept or enter delivery, and most of them want to close their positions before the first notice date.

Open positions will increase or decrease when new traders enter the market or existing traders enter the market. Only when the new buyer completes the transaction with the new seller will the open position increase. In other words, the transaction between them will constitute a new contract. For example, if the new york Metal Exchange (COMEX) has 8,500 gold open contracts in April, it means that many parties hold 8,500 contracts at the end of the trading day, and the empty parties also have 8,500 contracts. If the open position increases to 8600, it represents the net increase of new contracts for buying and shorting 100.

When the original multi-party sells the 1 contract and the original empty party makes up the position of the 1 contract, only in this case will the 1 contract be reduced when the position is opened, because this contract no longer exists. If the original bull sells the 1 contract to a new bull, the open position contract remains unchanged. Similarly, if the 1 contract covered by the original short position is sold by the new short position, the open position will not change.

Most futures and options "exchanges" publish open positions one day after the price, and some "exchanges" can inquire about the estimated open positions by telephone.

Generally speaking, the graph of opening positions is represented by curves, which are listed at the lower side of the price trend chart. Some graphic service companies also provide the average open position in the past few years. When opening a warehouse deviates from the normal seasonal pattern, it often represents great significance. The opening of many commodities is seasonal, because many commercial users in the market will hedge according to the seasonal cycle.

Referring to the above figure, opening a position represents the number of bulls or shorts in a futures or options market, and opening a position can show the conflict intensity between bulls and shorts.

The increase of short positions means that the conflict between long and short positions is more acute, and the existing trend will continue to develop. Open positions will increase in price increases, and bulls can overweight (points A and D). Opening a flat position shows that losers are unwilling to enter the market, and the existing trend is beginning to age. Take profit or adjust the stop-loss price (points B and E). The decrease in open positions means that winners and losers leave one after another, and the trend is coming to an end. Without fuel, the fire can't last. Opening positions decreases with a certain trend, which is a signal that the trend is about to reverse.

On the far right side of the graph, the price has stabilized from the decline in 10, and the open position has also stabilized. The previous wave of decline in cocoa has led to the emergence of unstable bulls, and the price is about to resume its upward trend. At this time, you can go long and set the stop loss below the recent low.

The open position contract of foreign exchange futures usually falls four times a year, which occurs when the contract is extended. If the opening delay does not decrease, it shows that traders have a strong sense of identity with the existing trend and are likely to accelerate.

Public psychology with an open position

Every futures or option contract needs a long position and a short position. The bulls think that the price will rise, so they buy; Bears think that prices will fall, so they are short. When a transaction occurs between two people, the open contract will increase by 1 contract. Of course, the single contract they buy and sell is not enough to promote the market. However, when thousands of traders make such transactions at the same time, it will push the trend or cause a reversal.

The amount of positions can reflect the conflict intensity between long and short sides. It reflects the willingness of many parties to continue to hold long positions and the willingness of empty parties to continue to hold short positions. If many parties and short parties think that the market will not develop in a favorable direction, they will end their positions and open positions will also decrease.

Every transaction involves two people with opposite positions. Whenever the price changes, one party will get hurt: if the price rises, the bears will suffer; When prices fall, bulls will suffer. As long as the losers don't despair and continue to insist, Jiancang will not change.

The increase in open positions represents a group of confident bulls facing another group of confident bears. The opposition between the two camps is more acute, and one of them is bound to lose money. But as long as the potential losers keep pouring in, the existing trend will continue to develop. l； Di Bellevue clearly pointed out this view in his classic book "Drawing the Price Behavior Chart of General Commodity Market".

As long as bulls and bears have strong differences on future price development, they will increase their positions. Maintaining the trend requires difference and confidence. The increase in open positions means that the supply of losers continues to grow, and the current trend should be sustainable. In the upward trend, the increase in opening positions represents long buying and short selling. The bulls think that the price will continue to rise, and the bears think that the price is too high. Once the bears are squeezed by the upward trend, they will be forced to cover their positions. The purchase will further push up the price.

In the downward trend, the increase in opening positions means that short positions take the initiative to short, and long positions are taken at the bottom. If the price continues to fall, the bulls will be forced to quit, and their selling pressure will push the price down further. The increase in opening positions shows that the trend at that time was safe.

If the bulls think that the price will rise and buy, but the bears are unwilling to sell short because of fear, then the bulls can only take the contract from other bulls who want to make a profit. The transaction between them will not constitute a new contract, and the open contract will remain unchanged. If the position is not closed in the upward trend, the supply representing the loser will no longer grow. If the bears think that the price will fall short, but many parties dare not take the offer, the bears can only sell the contract to other bears who want to make a profit. The transaction between them will not constitute a new contract, and the open contract will remain unchanged. If the position is not closed in the downward trend, the supply representing the loser will no longer grow. If the trend of opening positions tends to be flat, the warning yellow light has been lit-the trend development has entered the final stage, and time is running out.

The decrease in open positions indicates that the loser admits the loss and the winner takes profits. When their differences of opinion decreased, it showed that the trend was about to reverse. When the losers leave the market in despair and their positions cannot be replaced by new losers, the open positions will be reduced. When many parties decide to end the long position, the short side decides to cover the short position and they will trade with each other. In this case, the existing contracts will disappear and the open positions will be reduced. The reduction of open contracts means that the winners convert their chips into cash, and the losers can't bear the loss and leave. So, the red light is on? It marks the end of the trend.

Open position trading rules

1, 10% open position change, which is worth noting; 25% change represents the main trading information. Whether the open position is rising, falling or flat depends on whether the price is rising, falling or developing horizontally at that time.

2. The increase in open positions in price increases can confirm the upward trend. Bulls can overweight, which means that bears keep coming in. When they admit the failure and make up for it, the purchase will further push up the price.

3. The increase in closing positions during the price decline indicates that the low-end undertakers are quite active. Bears can continue to overweight, because when bulls come out, their selling pressure will further force prices down.

4. In the horizontal trend of price, the number of open positions increases, which is a sign of short positions. In this price trend, most short positions come from commercial hedgers, not speculators. If there is no obvious price trend, the opening of positions will increase greatly, indicating that smart risk averse people are shorting the market.

5. The decrease of open positions in the horizontal price trend indicates that business risk aversion is covering, which is a buying signal. When business users start to make up, they are bullish.

6. The decrease in open positions during the price increase shows that both winners and losers feel "cold feet". Long profit-taking and short compensation cover. The market will reflect the future in advance, and if most people accept a certain trend, it means that the trend is about to reverse. If the opening position decreases during the price increase, end the long position and prepare to short.

7. When the price falls, the open position decreases, which means that the short position gains and the long position confirms the loss. In this case, you should make up your position and prepare to buy.

8. Opening positions leveled off in the price increase, which is a warning of the aging trend of the upward trend, and the upward trend has lacked stamina. In this case, bulls should adjust the stop price to avoid new buying. On the other hand, if the open position flattens in the price decline, it means that the downward trend is mature, and it is best to adjust the stop loss price of the short position. If the price is equal to the opening position, it is meaningless.

The higher the opening position, the more active the market, and the less serious the price difference between import and export. Short-term traders should focus on the market with the highest open position, and in the futures market, they should choose the monthly contract with the largest open position.

Application example:

We can judge the market outlook according to the relationship between index changes and positions, as shown in the following table:

For example, if the index rises, many parties will make profits, and the short party will lose money. If the opening position rises, it means that many parties are not profitable, and the price that they are satisfied with has not yet arrived, and they have increased their investment. At this point, the market outlook is likely to continue to rise. On the other hand, if the number of positions is reduced, it means that many parties have made profits, the price they are satisfied with has been reached, and the market outlook is easy to stop.