Futures Terms

 2019-11-19 08:48:22

Futures contract: A standardized contract that is uniformly defined by the futures exchange and that stipulates the delivery of a certain quantity and quality target at a specific time and place in the future.


Futures fee: equivalent to the commission in the stock. For stocks, the fees for stocks include stamp duty, commission, transfer fees and other fees. Relatively speaking, the cost of engaging in futures trading is only a transaction fee. Futures commission refers to the fee paid by a futures trader for a certain percentage of the total value of the contract after the sale of the futures.


Settlement: refers to the liquidation of the profit and loss of the trading parties according to the settlement price announced by the futures exchange.


Delivery: When the futures contract expires, according to the rules and procedures of the futures exchange, the two parties through the transfer of the ownership of the goods contained in the futures contract, the process of closing the contract at the end of the period.


Opening a position: The act of buying or selling a futures contract is called “opening a position” or “establishing a trading position”.


Closing a position: refers to the behavior of a futures trader buying or selling a futures contract with the same variety, quantity and delivery date as the futures contract, but with the opposite direction of the transaction.


Daily limit: The price limit of the futures contract means that the trading price of the futures contract in one trading day shall not be higher or lower than the specified price increase and decrease. The price exceeding the price increase and loss will be regarded as invalid and cannot be concluded.


Arbitrage: A trading technique that can be used by speculators or hedgers to buy spot or futures commodities in one market while selling the same or similar goods in another market, and hopes that the two trades will generate a profit of the spread.


Explosion: It means that the investor account equity is negative. It shows that investors not only lost all the deposits but also owed debts to futures brokerage companies.

Settlement price: refers to the weighted average price of the transaction price on the day of a futures contract. If there is no transaction on the day, the settlement price of the previous trading day shall be the settlement price of the day.


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


Trading Instructions: There are three types of orders for stock index futures trading: market order, limit order and cancel order. The trading order is valid on the day of the transaction, and the customer may propose a change or cancellation before the order is completed.

 

Hedging: Buying (selling) the same futures contract as the number of commodities in the spot market, with similar maturities but opposite trading directions, to sell (buy) the same futures contract in the future. To offset the actual price risk of this commodity or financial instrument due to changes in market prices.


Position: A market contract, that is, the number of futures contracts bought or sold without hedging. For the buyer, it is said to be in a long position; for the seller, it is said to be in a short position.