The purpose of futures trading. Hedging: It is to buy (sell) futures contracts with the same quantity as the spot market, but in the opposite direction, so as to compensate the actual price risk caused by price changes in the spot market by selling (buying) futures contracts at some future time.
The most basic types of hedging can be divided into buying hedging and selling hedging. Buying hedging refers to buying futures contracts through the futures market to prevent losses caused by rising spot prices; Selling hedging refers to selling futures contracts through the futures market to prevent losses caused by falling spot prices.
Hedging is the driving force of the futures market. Whether it is the agricultural futures market or the metal and energy futures market, its appearance stems from the spontaneous trading behavior of buying and selling forward contracts when enterprises face the risks brought by the sharp fluctuation of spot prices in the production and operation process. The trading mechanism of this forward contract has been continuously improved, such as standardizing the contract, introducing hedging mechanism and establishing margin system, thus forming modern futures trading. Enterprises purchase insurance for production and operation through the futures market, which ensures the sustainable development of production and operation activities. It can be said that the futures market is not a futures market without hedging.
The purpose of futures trading. Speculation: The term "speculation" used in futures and securities trading is not a derogatory term, but a neutral word, which refers to the trading behavior of grasping the opportunity and making use of the price difference in the market according to the judgment of the market. Speculators can "short" or "short". The purpose of speculation is very direct-that is, to make profits from the price difference. But speculation is risky.
According to the length of holding futures contracts, speculation can be divided into three categories: the first category is long-term speculators, who usually hold futures contracts for days, weeks or even months after buying or selling them, and hedge when the price is favorable to them; The second type is short-term traders, who generally buy and sell futures contracts on the same day or a trading festival, and do not hold positions overnight; The third category is profit-seekers, also known as "hat snatchers". Their skill is to take advantage of small price changes to make small profits, and they can make multiple rounds of trading in one day.
Speculators are an important part of the futures market and an essential lubricant for the futures market. Speculation enhances the liquidity of the market and bears the risk of hedging transaction transfer, which is the guarantee for the normal operation of the futures market.
The purpose of futures trading. Spread: refers to buying and selling two different futures contracts at the same time. Traders buy contracts that they think are "cheap" and sell those "high-priced" contracts at the same time, benefiting from the changing relationship between the prices of the two contracts. In arbitrage, traders are concerned about the mutual price relationship between contracts, not the absolute price level.