The so-called futures trading refers to the trading behavior of both parties buying and selling futures contracts on the futures exchange.

Futures trading is a new type of trading method developed on the basis of spot trading, through the transaction of standardized futures contracts in futures exchanges.

Futures trading follows the principles of “openness, fairness and impartiality”.

Buying futures is called "short buying" or "long", which is also a long-term transaction.

Selling futures is called "short selling" or "short position", which is also a short transaction.

The transaction of starting to buy or sell a futures contract is called "opening a position", and holding the contract in the hands of a trader is called "holding a position". Traders understand

The act of conducting reverse trading on the contract in hand is called "closing" or "hedging". If the delivery month arrives and the contract in the hands of the trader has not yet been hedged, then those holding short contracts must prepare physical goods and be ready to submit delivery, and those holding long contracts must prepare funds and be ready to accept physical delivery.

Things. Under normal circumstances, most contracts are settled by hedging before expiration, and only a few require physical delivery.

Futures trading and spot trading have the same points: they are both a trading method, both are real purchases and sales, and involve the transfer of commodity ownership

etc.

The difference between futures trading and spot trading:

1. The direct objects of buying and selling are different

The direct object of buying and selling in spot trading is the commodity itself, with samples and Physical goods, see the goods pricing.

The direct object of futures trading is futures contracts, which is how many hands or futures contracts to buy or sell.

2. The purpose of the transaction is different. Spot trading is a transaction of first-hand money and goods. It is to obtain or transfer the ownership of goods immediately or within a certain period of time. It is a direct means to meet the needs of buyers and sellers.

Futures trading The purpose is generally not to obtain physical objects at maturity. The purpose of the hedger is to transfer the price risk in the spot market through futures trading. The purpose of the investor is to obtain risk profits from the price fluctuations in the futures market.

3. Different transaction methods

Spot transactions are generally one-on-one negotiations to sign a contract. The specific content is agreed upon by both parties. If the contract cannot be honored after signing, it must resort to legal action

Law.

Futures trading is conducted in an open and fair competition manner. Negotiating one-on-one deals, or private hedging, is illegal.

4. Different trading venues

Spot transactions are generally not restricted by transaction time, location, or objects. Transactions are flexible, convenient, and highly random, and can be traded at any venue

Hand trading.

Futures trading must be conducted openly and centrally within the exchange in accordance with regulations, and cannot be traded over-the-counter.

5. Different commodity ranges

The varieties of spot trading are all commodities that enter circulation, while the varieties of futures trading are limited. Mainly agricultural products, petroleum, metal commodities, as well as some primary raw materials and financial products.

6. Different settlement methods

Spot transactions are cash on delivery. No matter how long the time is, it is settled once or several times.

Futures trading implements a daily debt-free settlement system, and profits and losses must be settled daily. The settlement price is calculated based on the weighted average of transaction prices.

Characteristics of commodity futures trading:

1. Use a small amount to make a big difference: You only need to pay 2-20% of the performance deposit to control 100% of the virtual funds.

2. Transaction convenience: Since the main factors in futures contracts, such as commodity quality and delivery location, have been standardized, the interchangeability and liquidity of the contract are relatively high.

3. Information disclosure and high transaction efficiency: Futures trading enables traders to compete fairly under equal conditions through open bidding. At the same time, futures trading has fixed venues, procedures and rules, and operates efficiently.

4. Futures trading can be operated in both directions, simple and flexible: you can buy or sell futures contracts after paying the margin, and only use a few

a few instructions in a few seconds or Deals can be closed within minutes. When the market is at a favorable price, close the position or cover the position in the opposite direction.

5. The performance of the contract is guaranteed: After the futures transaction is completed, it must be settled and confirmed through the settlement department, so there is no need to worry about the performance of the transaction

.