Futures Investment Theory

2. Futures speculation

(2) The role of futures speculation

In the futures market, speculative trading is indispensable. It plays a role in increasing market liquidity and assuming the risk transferred by hedgers. It is also conducive to the smooth progress of futures trading and the normal operation of the futures market. It is one of the important conditions for the futures market to play its hedging function and price discovery function.

① Take the initiative to bear the risk of futures market.

② Speculative trading promotes market liquidity and ensures the realization of the price discovery function of the futures market.

③ Appropriate futures speculation can mitigate price fluctuations.

④ Speculators in the futures market not only use short-term price fluctuations to speculate, but also use the price difference changes of the same commodity or similar commodities at different times and between different exchanges to carry out arbitrage transactions. Such speculation will form a more reasonable price structure between different varieties and between different markets.

The realization of the role of speculative trading in slowing down price fluctuations is a prerequisite. First, speculators need rational operation, and speculators who violate market rules will eventually be eliminated from the futures market. Second, speculation should be moderate. Excessive speculation such as market manipulation can not slow down price fluctuations, but will artificially widen the gap between supply and demand, destroy the relationship between supply and demand, intensify price fluctuations, increase market risks, and make the market lose its normal function. Therefore, we should promote rational trading, curb excessive speculation and crack down on market manipulation.