Futures risk education

place an order

After paying the deposit for opening an account in full as required, the customer can start trading and place an order on commission. The so-called order placing refers to the behavior that the customer issues a trading order to the business personnel of the futures brokerage company before each transaction, stating the type, quantity, price, etc. of the contract to be bought and sold. Generally, customers should first be familiar with and master the relevant trading instructions, and then choose different futures contracts for specific transactions.

（1） Common trading instructions

Trading orders commonly used internationally include: market order, limit order, stop loss order, cancellation order, etc. There are two kinds of trading orders stipulated by China's futures exchanges: price limit orders and cancellation orders. The trading orders are effective on the same day. Before the order is closed, the customer can propose change or cancellation.

1. Market order

Market order is one of the commonly used orders in futures trading. It refers to an order that is executed immediately according to the market price at that time. The client does not need to specify the specific price when issuing such order, but requires the market representative of the futures brokerage company to conclude the transaction at the best price that can be executed in the market at that time. This order is characterized by fast transaction speed and cannot be changed or revoked once it is issued.

2. Price limit order

A price limit order is an order that must be executed at a limited price or a better price. When issuing a price limit order, the customer must specify the specific price level. It is characterized by the ability to close transactions at the expected price of customers, which is relatively slow and sometimes impossible.

3. Stop loss order

Stop loss order refers to an order that becomes a market order and is executed when the market price reaches the customer's expected price level. By using stop loss orders, customers can not only effectively lock profits, but also minimize possible losses, and also establish new positions with relatively small risks. (At present, there is no such directive in China)

4. Cancel instruction

Cancellation instruction refers to the instruction required by the customer to cancel an instruction. By executing the order, the customer completely cancels the previously issued order, and no new order replaces the original order.

All orders of futures brokerage companies to their clients must be centrally matched through the exchange, and no private hedging is allowed, nor are they allowed to guarantee profits to clients or share profits with clients.

（2） Ordering method

The client shall formulate a detailed and thorough trading plan before formal trading. After that, the customer can place an order according to the plan. Customers may issue trading instructions to futures brokerage companies in writing, by telephone or by other means as prescribed by the CSRC. The specific order placement methods are as follows:

1. Place an order in writing

The client shall fill in the transaction form in person, sign it and submit it to the Trading Department of the futures brokerage company, and then the Trading Department of the futures brokerage company shall send the declaration by telephone to the company's exit representative in the futures exchange to enter the order into the exchange host for summary and delivery.

2. Order by phone

The customer directly sends the order to the Trading Department of the futures brokerage company by telephone, and then the Trading Department notifies the listing representative to place an order. The futures brokerage company shall record the customer's instructions for verification. After that, the customer shall sign on the transaction sheet.

The futures brokerage company shall timely notify the listing representative after receiving the customer's instructions. The market representative shall timely input the customer's instructions into the computer terminal on the trading seat for bidding transactions.

（3） Competitive bidding

The price of domestic futures contracts is formed by computer matching.

Computer matchmaking is a kind of computer automated trading mode designed according to the principle of open outcry, which refers to the process that the computer trading system of the futures exchange matches the trading instructions of both parties. This transaction mode is accurate and continuous.

The operation of the computer trading system of domestic futures exchanges generally ranks the purchase and sale orders in the principle of price priority and time priority. When the buying price is greater than or equal to the selling price, the matching transaction will be automatically completed. The matching transaction price is equal to the middle of the buying price (bp), the selling price (sp) and the previous transaction price (cp).

The opening price and closing price are both generated by call auction.

The call auction of opening price shall be conducted within 5 minutes before the opening of each trading day of the contract of a certain month of a certain variety, of which the first 4 minutes shall be the time to declare the purchase and sale price orders of futures contracts, and the last 1 minute shall be the time to match the call auction. The opening price shall be generated at the opening of the market.

The closing price call auction is conducted within 5 minutes before the closing of each trading day of a certain month contract of a certain variety, of which the first 4 minutes are the time for the declaration of the purchase and sale price orders of futures contracts, and the last 1 minute is the time for the matching of the call auction, and the closing price is generated at the closing.

The trading system automatically controls the start and end of the call auction declaration and displays it on the computer terminal.

The call auction adopts the principle of maximum trading volume, that is, the maximum trading volume can be obtained by trading at this price. All purchase orders higher than the price generated by the call auction are completed; All sales orders that are lower than the price generated by collective bidding are completed; The purchase or sale orders that are equal to the price generated by the call auction will be closed according to the amount of purchase orders and sales orders, and the order amount of the smaller party.

（4） Transaction return and confirmation

After receiving the trading order, the market representative of the futures brokerage company will input the order into the computer as soon as possible after confirmation. When the computer displays the order of transaction, the market representative must immediately feed back the transaction result to the trading department of the futures brokerage company. The Trading Department of the futures brokerage company will record the transaction results fed back by the market representative on the transaction sheet and stamp it with a time stamp, and then report the record sheet to the customer. The transaction return record sheet shall include the following items: transaction price, number of transactions, transaction return time, etc.

If the client has any objection to the items recorded in the trading settlement sheet, it shall submit a written objection to the futures brokerage company before the opening of the next trading day; If the client has no objection to the items recorded in the trading result sheet, it shall sign on the trading settlement sheet for confirmation or confirm in the manner agreed in the futures brokerage contract. If the customer neither confirms the items recorded in the transaction settlement sheet nor raises any objection, it shall be deemed as the confirmation of the transaction settlement sheet. If the client has any objection, the futures brokerage company shall verify it according to the original order records and transaction records.