Futures Market Characteristics

Futures market is a place for buying and selling commodities, securities and futures.

Futures refer to the fact that the two parties will not deliver immediately after the agreement has been reached, but will actually deliver the goods in the future period, or that futures will buy some standardized commodities or financial products through futures exchanges. Standardization refers to the quantity, grade, delivery time and location of goods or financial products. The price of the contract is determined by the open call price of the agent between the buyer and the seller in the exchange. In futures market, trading is actually a futures contract, that is, the promise of both parties to buy and sell futures.

The characteristics of the futures market are:

(1) the trading objects are complex. According to futures trading objects, futures can be divided into commodity futures and finance. futures Two broad categories. Commodity futures also include metal futures, industrial futures and animal and plant futures. Of course, commodities that can be traded for futures must have the conditions of large supply and demand, non perishable, storage, standardization and classification, and free competition price. Therefore, futures trading is applicable to large bulk commodities such as grain, cotton, sugar and foreign exchange, securities and so on. Financial futures include currency futures, interest futures, stock index futures and options futures.

(2) there are strict restrictions on the location, mode and place of the transaction. Futures investment is the operation of many buyers or sellers, in futures exchanges, according to certain rules, through bargaining, fierce competition after the completion.

(3) futures, in most cases, do not require delivery of goods or financial products. In futures trading, the holder of a futures contract can perform the obligations of the contract, or transfer the contract to the futures transaction before the time of delivery. The contract which is directly required to perform and deliver on spot is very few, which generally accounts for only 1-2% of the total number of contracts, and most of them are short selling and short selling.

(4) futures use capital Less, flexible and convenient. Futures trading and Goods in stock The main difference between transactions is that futures investors can buy large amounts of securities even if they do not hold sufficient funds or securities. In addition, on the day of delivery and buying futures, the difference is settled, that is, hedging. Futures trading is speculative because most futures traders do futures trading not only to avoid risks, but to commit greater risks in the current loan transaction to seek greater benefits.

In the futures market, a transaction usually goes through the following steps:

(1) agreement on effectiveness and ownership;

(2) margin requirements and profit and loss observations;

(3) compensation contract and Realization of profit and loss;

(4) actual delivery.