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Futures

A futures contract the buyer, if the contract will be held to maturity, so he has an obligation to buy futures contracts corresponding to the object; and a futures contract the seller, if the contract will be held to maturity, so he has the obligation to sell futures contracts corresponding to the subject matter (some futures contracts expire delivery but not clearing price, for example stock index futures stock index is due in accordance with an average of the final settlement in the hands of the futures contract). Of course, futures contract traders can also choose to reverse the sale before the expiration of the contract to cancel the obligations.
When buying and selling futures contracts, both parties need to pay a small amount of money to the clearing house as a performance bond. The money is called a bond. The initial buy contract is called a long position, and the first contract is called a short position. Then, the contract on hand should be settled daily, that is, the daily market.
The establishment of trading positions (the term is called open) need not have been held to maturity, at any time can make a reverse transaction in the stock index futures contract before the expiration of the original offset positions, the deal is closed. If the 10 hand stock index futures contract is sold on the first day, the 10 hand contract is bought back in second days. The first is the opening 10 hand stock index futures short positions 10 hands, second pen is short of stock index futures. The second day and bought 20 stock index futures contracts, then become open 20 lots of stock index futures bulls. And then sell 10 of them, then called the stock out of 10 hand stock index futures, there are still 10 hand stock index futures bulls.
At the end of the day, the open contract is called open position. In the above transaction process, the first day of trading positions are 10 hand stock index futures, and second days trading positions are 10 hand stock index futures.

 

Main features

1.With small broad. Futures contracts can contract several or even dozens of times only by paying 5-10%'s performance bond. Because of the leverage effect of the margin system of futures trading, it has the characteristics of "small broad", and traders can use a small amount of funds for large trading, saving a lot of floating capital.
2.Two-way trading. In futures markets, you can buy first and sell later, you can also sell first and buy later, and the investment is flexible.
3.There is no need to worry about compliance. All futures transactions are settled through futures exchanges, and the exchange becomes the counterparty of any buyer or seller, guaranteeing each transaction. So traders need not worry about the performance of the transaction
4.Market transparency. The transaction information is completely public and the transaction is conducted in an open competitive manner, allowing traders to compete openly on equal terms.
5.Well-organized, high efficiency. Futures trading is a standardized trading, fixed transaction procedures and rules, ring ring ring, efficient operation, a transaction usually can be completed within a few seconds.

 

Transaction characteristics

Contract standardization

Futures trading is conducted by buying and selling futures contracts, while futures contracts are standardized. The standardization of futures contracts refers to all the provisions of futures contracts, other than the price, which are stipulated by the futures exchange in advance and have the characteristics of standardization. The standardization of futures contracts brings great convenience to futures trading. Both sides of the transaction do not need to negotiate specific terms of the transaction, save transaction time and reduce transaction disputes.

 

Transaction centralization

 

Futures trading must be conducted on a futures exchange. Futures exchanges are made up of members, only members can enter trading. Those who are on the sidelines should participate in futures trading only if they want to participate in futures trading. Therefore, the futures market is a highly organized market, and the implementation of a strict management system, futures transactions eventually completed in the futures exchange.

 

Two way trading and hedging mechanism

 

It is a two-way trade, futures traders can buy futures contracts as the beginning of Futures Trading (called to buy, you can also sell positions) futures contracts as the transaction start (called sold Jiancang), also known as "maikongmaikong". With the characteristics of two-way trade links and hedge in futures trading mechanism, this is not the most trading at the expiration of the contract delivery to fulfill the contract, but in the opposite direction when trading trading positions to lift performance obligations. Specifically, after buying a position, you can terminate the performance obligation by selling the same contract. After you sell the position, you can terminate the performance responsibility by buying the same contract. The characteristics of two-way trading and hedging mechanism of futures trading, attracting a large number of speculators involved in the transaction, because in the futures market, speculators have double profit opportunities, the futures price rises, can buy low and sell high profit, the price falls, can buy low and sell high profit, and speculators can hedge mechanism avoid physical delivery of trouble, the participation of speculators to greatly increase the liquidity of the futures market.

 

Leverage mechanism

 

The implementation of futures margin system, that is to say the traders pay only a small amount of margin in futures trading, the transaction value of the 5%-10% general contract, contracts can be done several times or even dozens of times, the characteristics of futures to attract a large number of speculators involved in futures trading. A futures transaction characterized by a small amount of money that can be used for a larger value, and is figuratively referred to as a leverage mechanism". The leverage mechanism of futures trading makes futures trading have the characteristics of high yield and high risk.

 

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