What are futures and futures trading?

1. Futures and spot are completely different. Spot is actually a tradable commodity. Futures are mainly not commodities, but standardized tradable contracts based on some popular products such as cotton, soybeans and oil and financial assets such as stocks and bonds. Therefore, the subject matter can be commodities (such as gold, crude oil and agricultural products) or financial instruments.

2. Futures trading is an advanced trading method based on spot trading and forward contract trading. In order to transfer the risk of market price fluctuation, it refers to the form of buying and selling futures contracts in an open competition on commodity exchanges through brokers.

Extended data:

Futures trading implements margin system, that is to say, traders only need to pay a small amount of margin, which is generally 5%- 10% of the contract value, and can complete several times or even dozens of times of contract transactions. This feature of futures trading attracts a large number of speculators to participate in futures trading. One of the characteristics of futures trading is that it can make a big investment with little money, which is vividly called "leverage mechanism". The leverage mechanism of futures trading makes futures trading have the characteristics of high returns and high risks.