Basic knowledge of futures

The Concept of Futures and the Function of Futures Market

8、 Concept of futures trading

Futures trading is an organized trading mode developed on the basis of spot trading and conducted by buying and selling standardized futures contracts in futures exchanges.

In the futures market, most futures contracts bought and sold by traders are closed in the form of hedging before expiration. That is to say, the person who buys the futures contract can sell the futures contract before the contract expires; The person who sells the futures contract can buy the futures contract to close the position before the contract expires. It is allowed to buy before selling or sell before buying. Generally speaking, physical delivery in futures trading is only a small part.

The object of futures trading is not the entity of commodity (subject matter), but the standardized contract of commodity (subject matter).

The purpose of futures trading is to transfer price risk or obtain risk profit.