What Are The Concepts Related To Futures Trading?

Opening, holding and closing positions: buying and selling in futures pactions, as long as new positions are called open positions.

The positions held by traders are called positions.

Liquidation refers to a trader's closing of trading behavior, and the way to end it is to hedge against the opposite direction.

Because

Example: an investor bought the 10 hand (Zhang) of March Shanghai and Shenzhen 300 index futures in December 30th, and the paction price was 1450 points. At that time, he had 10 hands long positions.

By January 10th next year, the investor will see the futures price rise to 1500 points, so sell at the same price and open 5 positions in March stock index futures. After the paction, the investor still has more than 5 hands in the actual position.

If the investor on the day of the paper is selling the 5 futures of stock index futures in March, after the paction, the investor's actual position should be 15 hands, 10 hands long positions and 5 short positions.

Burst warehouse: refers to the negative equity of investor account.

It shows that investors have not only lost all their deposits but also owed futures brokerage companies debts.

As a result of day-to-day liquidation and mandatory liquidation, futures trading will not happen in general.

However, in some special cases, if there is a jump in the market, there may be an explosion of accounts with heavier positions and opposite directions.

Happen

Long and short: futures trading implements two-way trading mechanism, both buyers and sellers.

In futures trading, the buyer calls a bull and the seller calls it short.

Although the stock market also calls the buyer "long", the seller is short.

But a seller must be a stock holder in a stock paction, and a person without stock can not sell it.

Settlement price refers to the weighted average price of the paction price on a certain futures contract.

In the absence of a paction, the settlement price of the above trading day shall be used as the settlement price of the day.

The settlement price is the basis for the profit and loss settlement of the unliquidated contract and the setting up of the next trading day.

Volume: refers to the bilateral number of all futures contracts in a futures contract during the day trading.

Position: refers to the bilateral number of unliquidated contracts held by futures traders.

Total position: the total number of "unliquidated" contracts on which all investors in the market are on the futures contract.

In the market information released by the exchange, there is a "total position" column.

The change of total position reflects investors' interest in the contract and is an important index for investors to participate in the contract paction.

If the total position keeps increasing, it shows that both sides are opening their positions. Investors' interest in the contract is growing, and off site funds are continuously flowing into the contract paction. On the contrary, when the total position is decreasing, it shows that both sides of the paction are liquidating, and traders' interest in the contract is ebbing.

Another situation is that when the volume of pactions increases, the total position does not change much, which indicates that the market is dominated by hand trading.

Changing hands: there are "long changing hands" and "empty hands" when changing hands. When the original traders with long positions sell their positions, the new bulls are called "multi exchange hands" when buying new stocks, while the "short hand change" refers to the original traders who are holding short positions to buy the positions, but the new ones are sold in open positions.

Trading instructions: stock index futures have three kinds of instructions: market orders, limit orders and cancellation orders.

The trading order is effective on that day, and the customer may make changes or revocation before the order is concluded.

First, the market price Directive: refers to the sale declaration without limiting the price, and orders as far as possible at the best price of the market.

Second, limit order: refers to the execution of orders at a fixed price or a better price.

Its characteristic is that if the paction is done, it must be the expected price or better price.

Third. Cancel order: the instruction that the customer will cancel one instruction previously issued.

If the previous instruction has been concluded before the cancellation order becomes effective, it is called the cancellation time, and the customer must accept the result of the paction.

If part of the paction is completed, the remaining part is not yet cancelled.

Hedging: buying (selling) is equivalent to the commodity in the spot market, with a similar duration, but the opposite direction of the futures contract, in order to offset the actual price risk of the commodity or financial instrument because of the market price change at the same time in the future.

Margin: margin is the financial guarantee that the exchange requires investors to ensure that they perform. It is the reputation of investors who are responsible for their trading positions, and the funds they have in their accounts.

According to the nature, margin is divided into three types: paction margin, settlement margin and additional margin.

Trading margin refers to the capital that investors ensure to perform in the special settlement account of the exchange, which is the deposit that has been occupied by the contract. The clearing margin is the remaining part of the investor's margin in the exchange settlement account.

Additional margin means that if the investor's right of account is less than the margin of the account, it means that the balance of the fund is negative and it means that the margin is insufficient.

According to the regulation, the futures brokerage company will notify the account owner to make up the margin before the opening date of the next trading day.

This is called an additional margin.

Compulsory liquidation: if the account owner does not make up the margin before the opening date of the next trading day, the futures brokerage company may make partial or all of the positions of the account holder in accordance with the regulations, until the remaining margin meets the specified requirements.

Position restriction: paction limit.

The maximum limit of the number of futures contracts that an exchange can provide for investors is to manage market risks from the market share allocation.

Bidding method: computer matching pactions.

Computer matchmaking is an automated paction method based on the principle of open outcry. It has the advantages of accuracy, continuity, speed and capacity.

In the early days of futures trading, there was no computer, so the public bidding method was adopted in the paction.

There are usually two forms of public bidding: one is the continuous bidding system (moving plate), which refers to the requirement that the traders in the exchange deal openly and openly shout prices in the exchange trading pool to express their purchase or sell contracts.

This kind of bidding is the mainstream of futures trading, and European and American futures markets adopt this approach.

The advantage of this method is that the atmosphere is active, but the defect is that the size of the staff is restricted by the site.

Many traders are crowded in the trading pool, so that traders have to use hand gestures to help deliver the paction information.

Another disadvantage of this approach is that floor traders have more information and time advantages than off Street traders.

Hat grabbing is often a patent for traders on the floor.

Another form of public outcry is Japan's one price system.

A single price system divides every trading day into sections. Each contract has only one price in each paction.

Each trade is called by the host first, and the floor traders according to their bid price to declare the number of pactions. If the purchase is more than the selling volume, the host will report another higher price; otherwise, a lower price will be reported until the number of pactions between buyers and sellers is equal at a certain price.

After the popularity of computer technology, the world's exchanges have used computers to replace the original public bidding.