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Chapter 24 Futures trading, small bets make a lot of money (1)
Futures trading is more attractive than stocks
Xiao Jiang works in a bank and usually pays special attention to the securities and futures markets.After China Gold Exchange launched the Shanghai-Shenzhen 3 index futures contract, Xiao Jiang devoted himself to studying stock index futures books and charts all day, preparing to participate in stock index futures trading.One day, Xiaojiang's grandmother saw that Xiaojiang was concentrating on researching stock index futures, and she became furious, saying: "Before liberation, your grandfather lost a bet on cotton yarn futures, and almost lost all his family property. Futures are gambling. How can you participate?" What about gambling? Burn all those futures books for me! Otherwise, you will walk out of the house!"

Some people may think that futures trading is speculation and gambling.In fact, futures trading is a legal financial market trading activity, which is protected by law and is essentially different from gambling.At the same time, futures trading is more challenging than stock trading.

The characteristics of futures are to make small bets, buy short and sell short, and make money in two directions. The risk is very high, so my country is very cautious about opening up futures trading.The speculation method of futures is very similar to that of the stock market, but there are very obvious differences.

[-]. Fight big with small

Stocks are traded in full amount, that is, you can only buy as much stock as you have, while futures is a margin system, that is, you only need to pay 5% to 10% of the turnover, and you can trade 1%.For example, if an investor has 1 yuan, if he buys a stock worth 10 yuan a share, he can buy 10 shares, and if he invests in futures, he can trade a commodity futures contract worth 10 yuan.

[-]. Transaction direction

Stock index futures trading can be done long or short; it can be bought first and then sold, or sold first and then bought. Therefore, stock index futures trading is a two-way transaction.At present, there is no short-selling mechanism for stock trading in my country. Stocks can only be bought first and then sold. It is a one-way transaction (the situation will change after some stocks allow securities lending in the future).

[-]. Transaction Mode

Futures operations can enter and exit unlimited times on the same day, that is, T+0 trading. If you find an operation error, you can immediately close the position and leave the market; in the stock market, you can buy on the same day and sell it the next day, that is, T+1 trading. Can wait to see the closing, but powerless.

[-]. Time constraints

There is no time limit for stock trading. If you are locked up, you can close the position for a long time, but the futures must be delivered when it expires, otherwise the exchange will forcibly close the position or make physical delivery.

[-]. Actual profit and loss

There are two parts to the stock investment return: one is the market price difference, and the other is the dividend distribution, while the profit and loss of futures investment is the actual profit and loss in market transactions.

[-]. Transaction Results

The result of futures trading is a "zero-sum game" (except for transaction costs). From the perspective of participants' losses, regardless of the handling fee, the futures market is always half of the people making money and half of the people losing money; the trading result of the stock market is " Win-win and lose together", and the systemic risk of the stock market is currently unavoidable.

Seven, the risk is huge

Due to the implementation of margin system, margin call system and restrictions on forced liquidation at maturity, futures have the characteristics of high return and high risk. In a sense, futures can make you rich overnight, or make you rich overnight. In an instant, there is nothing left, so investors should be cautious.

Futures trading has similar characteristics to stock trading, but also has a different style from stock trading. Compared with stock trading, futures trading is more universal, operable, and flexible.

Preparations and procedures for futures trading
Futures investors must have a good psychological quality and the ability to take risks, have a strong will, strong self-discipline, be able to calmly handle their trading business, and not act emotionally.Futures investors should be able to calmly and calmly analyze and observe the rapidly changing price market, and make reasonable decisions.

[-]. Before entering the market for futures trading, the preparations that should be done

(1) Psychological preparation.Futures prices fluctuate all the time, so it is natural to make profits from correct judgments and losses from wrong judgments.Therefore, psychological preparation for profit and loss before entering the market is very necessary.

(2) Knowledge preparation.Futures traders should master the basic knowledge and basic skills of futures trading, understand the trading rules of the commodities they participate in trading, and issue trading orders correctly so that they can be in a winning position in the futures market.

(3) Preparation for market information.In the futures market, a free competitive market completely determined by the law of supply and demand, information is very important.Whoever can grasp the market information in a timely, accurate and comprehensive manner will win in the highly competitive futures trading.

(4) Draw up a trading plan.In order to control the loss to a minimum, it is necessary to conduct transactions in a restrained manner. Before entering the market, it is necessary to draw up a trading plan as the code of conduct for the transaction.

[-]. The general process for customers to participate in futures trading

The completion of futures trading is carried out through the organic connection of four components: futures exchanges, clearing houses, brokerage companies and traders.

(1) The futures trader goes through the account opening procedures in the brokerage company, including signing a letter of authorization authorizing the brokerage company to act on behalf of the sales contract and pay the handling fee. The indicator handles the trading of futures.

(2) After the broker receives the customer's order, immediately notify the representative of the brokerage company stationed in the exchange by telephone, telex or other methods.

(3) The trading representative of the brokerage company stamps the received order with a time stamp and sends it to the market-exiting representative in the trading hall.

(4) The on-site market representative enters the customer's order into the computer for trading.

(5) After each transaction is completed, the on-exchange market representative must notify the off-exchange broker of the transaction record and notify the client.

(6) When the client requests to close the futures contract, the broker must be notified immediately, and the broker will notify the trading representative stationed at the exchange by telephone, and the futures contract will be hedged through the on-site market representative, and at the same time through the transaction The computer performs liquidation, and the broker sends the net profit or loss statement after hedging to the client.

(7) If the customer does not close the position in a short period of time, it is generally settled once a day or a week at the settlement price of the exchange on that day.If there is a loss in the book, the customer needs to temporarily make up the loss difference; if there is a book surplus, the brokerage company will make up the profit difference to the customer.Until the client closes the position, the actual profit and loss will be settled.

Before entering the futures market for actual trading, you must conduct research on futures trading, understand the characteristics of futures trading, and have a comprehensive understanding of the varieties you want to trade, and you cannot trade blindly.Only by doing the preliminary work well and meticulously can we seize the only few good opportunities in a year.

Practical knowledge of commodity futures trading
Knowing the characteristics and trading process of futures does not mean that you can operate futures smoothly. You also need to master the following relevant practical knowledge.

[-]. Hedging

(1) Buy hedging: (also known as long hedging) is to buy futures in the futures market, and use the long positions in the futures market to guarantee the short positions in the spot market, so as to avoid the risk of price rise.

Example: An oil factory plans to purchase 3 ton of soybeans two months later in March. The spot price at that time was 1 yuan/ton, and the futures price in May was 22 yuan/ton.The plant was worried about rising prices, so it bought 5 ton of soybean futures.In May, the spot price really rose to 23 yuan per ton, while the futures price was 1 yuan per ton.The factory then bought the spot goods, with a loss of 5 yuan per ton; at the same time, it sold the futures, with a profit of 24 yuan per ton.The profit and loss of the two markets are offset, effectively locking in the cost.

(2) Selling hedging: (also known as short hedging value) is to sell futures in the futures market, and use the short position in the futures market to guarantee the long position in the spot market, so as to avoid the risk of price decline.

Example: In May, the supply and marketing company signed a contract with the rubber tire factory to sell 5 ton of natural rubber in August. The price is calculated according to the market price. The spot price in May is 8 yuan/ton, and the futures price in August is 1 yuan/ton.The supply and marketing company was worried about the price drop, so it sold 5 ton of natural rubber futures. In August, the spot price fell to 12 yuan/ton.The company sold spot goods at a loss of 8 yuan per ton, and bought 125 ton of futures at a price of 1 yuan per ton, making a profit of 8 yuan per ton.The profit and loss of the two markets are balanced, effectively preventing the risk of falling natural rubber prices.

[-]. Venture capital

(1) Speculative operations using fluctuations in the price of a certain product.

a buy short speculatively.

例：某投机者判断7月份的大豆价格趋涨，于是买入10张合约（每张10吨），价格为每吨2345元。后果然上涨到2405元/吨，于是按该价格卖出10张合约。获利：
（2405元÷吨－2345元÷吨）×10吨÷张×10张＝60元

b Short selling for speculation.

例：某投机者认为11月份的小麦会从目前的13元/吨下跌，于是卖出5张合约（每张10吨）。后小麦果然下跌至每1250元/吨，于是买入5张合约，获利：

（13元÷吨－1250元÷吨）×10吨÷张×5张＝25元

(2) Hedging for profit.

aUse the price difference arbitrage of related products.

bUsing the price difference arbitrage of the same product in different futures markets.

cUsing the price difference arbitrage of different delivery months of the same product.

d Use the price difference between spot and futures to arbitrage.

Understanding the relevant common sense of commodity futures trading practice is helpful to understand market conditions, predict risks and take relevant measures to avoid them.

How much do you know about futures investment mistakes
Lao Li worked hard in Shanghai for more than ten years and earned 30 yuan.Later, I heard that stock index futures can make money, so I invested all the 30 yuan in futures trading, thinking that I could double it, and then I could buy a house in Shanghai.

"This is a lifetime savings, don't be sloppy!" When trading stock index futures, Lao Li often thinks this way, but the more he thinks about it, the more nervous he becomes, so that he can't control his emotions and becomes a long position: the general trend jumps up, There was a smile on his face immediately; when the price went down, his brows immediately frowned.If you make a certain price, you will be happy; if there are some floating losses, you will have trouble sleeping and eating.Emotional ups and downs, not long after Lao Li fell ill due to excessive tension.

Futures trading is a high-risk investment method, and stock index futures traders must learn to control their emotions.In the case, Lao Li gambled his entire family into futures trading, which caused a heavy psychological burden. This is one of the misunderstandings of novices in futures trading.In addition, the problems that are prone to occur in the process of futures speculation are as follows.

[-]. Treat the futures market as a casino

(End of this chapter)