There are three main reasons why futures don't fluctuate like stocks.
1. The fluctuation range of commodity prices is far less than that of stock prices.
We often hear that some stocks have risen dozens of times and fallen by more than 90%, but it is rare to hear that a commodity suddenly rose so badly and fell so badly. Although commodities sometimes rise and fall, the range is still relatively small compared with stocks. Every commodity has its lowest value behind it, unlike stocks, which are likely to disappear overnight. Therefore, it is in line with market rules to set the daily limit of commodity futures smaller than that of stocks.
2. Commodity futures is a margin trading system.
The charm of futures lies in leverage. 10 times the capital amplification function, which can amplify both gains and losses. If Man Cang operates, the reverse price limit of 5% will cause 50% capital loss, so it is not easy to set an excessive price limit in a market with immature investment groups.
3. Prevent excessive speculation.
The wealth effect of futures is much higher than that of stocks, which naturally attracts a group of bold wealth chasers, or we can call them speculators. If the price limit of a trading day is too large, it will undoubtedly give these speculators greater profits and opportunities for excessive speculation, and may even lead to the collective action of speculators with large amounts of funds.