"Customer's equity" and "risk rate" are also frequently used terms in the futures market. The meaning of "customer's rights and interests" is sometimes clear and sometimes confusing to customers, so it is necessary to make some explanations. As the name implies, customer's rights and interests are customers' rights and interests, and futures industry refers to the total amount of funds that customers can enjoy in their accounts. When there is no position, the customer's equity is the total amount of funds in the customer's account (referred to as initial deposit). When there is a position, the customer's equity is equal to the sum of the total available funds in the customer's account and the position deposit, in which the available funds and the position deposit are dynamic, and the available funds can be positive or negative. When the available funds are negative, it means that the customer's rights and interests are less than the position margin.
In the case of customer positions, the customer's rights and interests can also be expressed by the initial margin, position margin, floating profit and loss and transaction costs of the futures company, namely:
Position margin = dynamic point of stock index futures × contract multiplier × buy (sell) × number of sheets × margin ratio
Customer's equity = position margin+available funds = initial margin+floating profit and loss handling fee of futures company.
Available funds = initial margin-position margin+floating profit and loss of futures company-handling fee
Customer position risk = (customer assets/position margin) × 100%
As can be seen from the formula, when the floating loss amount (initial margin-position margin-futures company handling fee), the available funds will become negative, indicating that the customer's rights and interests are less than the position margin, and the futures company will issue an insurance recovery notice. The available funds in your account are actually negative! It is difficult for customers in the securities industry to understand this. In fact, this is caused by the lagging pursuit of futures margin trading mechanism and insurance. Because stock index futures are margin trading, the loss is magnified, so the loss caused by reverse price fluctuation may make the customer's rights and interests lower than the position margin. However, because futures companies need to give customers time to pursue insurance, they usually allow customers' rights and interests to be lower than the position margin within the specified time, resulting in negative available funds.
At present, most futures companies define the position risk rate as the percentage of customer's equity in the position margin. From this definition, the customer's position risk rate reflects the proportion of the customer's equity to the position margin, so the smaller the "value" of the customer's position risk rate, the higher the customer's position risk. This violates the normal habit that the higher the risk, the higher the risk value, which is a small problem left over from the early chaos of the domestic futures industry. I point it out here to remind investors.
In fact, many new customers do ask this question, because in the consciousness of ordinary people, the greater the value of risk, the greater the risk should be. It can be seen that the risk rate of customer positions generally adopted in the futures industry will also mislead investors. When the risk of investors is still very low, some unfamiliar customers are scared and ask us why the risk of his new entry into the market is so high. In fact, the current calculation formula of position risk rate in futures industry expresses the position safety of customers. If the current position risk rate is changed to the position safety rate, there will be no problem that new customers are puzzled.
Sina statement: the content of this article is purely the author's personal opinion, which is for investors' reference only and does not constitute investment advice. Investors operate accordingly at their own risk.