Futures trading is an advanced trading method based on spot trading and forward contract trading. In order to transfer the risk of market price fluctuation, it refers to the form of buying and selling futures contracts in an open competition on commodity exchanges through brokers.
Futures, usually futures contracts, are contracts. A standardized contract made by a futures exchange to deliver a certain amount of subject matter at a specific time and place in the future. This subject matter, also known as the underlying asset, can be a commodity, such as copper or crude oil, a financial instrument, such as foreign exchange and bonds, or a financial indicator, such as three-month interbank offered rate or stock index. Futures trading is an inevitable product of the development of market economy to a certain stage.
The general process for customers to participate in futures trading is as follows:
1. The procedures for futures traders to open an account with a brokerage company include signing a power of attorney, authorizing the brokerage company to buy and sell contracts on their behalf and paying the secondary and renewal fees. After being authorized, the brokerage company can handle futures trading according to the terms of the contract and the customer's indicators.
3. After receiving the customer's instruction, the broker shall immediately notify the representative of the brokerage company in the exchange by telephone, telex or other means.
4. The trading representative of the brokerage company will stamp the received order and send it to the market representative in the trading hall.
5. On-site and off-site representatives input the customer's instructions into the computer for trading.
Six, after the completion of each transaction, the on-site and off-site representatives should inform the off-site broker of the transaction record and inform the customer.
When the customer requests to close the futures contract, he should immediately notify the broker, who will notify the trading representative stationed in the exchange by telephone, hedge the futures contract through the on-site and off-site representatives, and at the same time liquidate it through the trading computer, and the broker will send the hedged net profit and loss statement to the customer.
Seven, if the customer does not close the position in a short period of time, generally according to the settlement price of the day of the exchange settlement once a day or once a week. If there is a loss in the book, the customer needs to temporarily make up the loss difference; If there is a book surplus, the broker will pay the profit difference to the customer. The actual profit and loss can only be settled after the customer closes the position.