What are the Main Ways to Settle Futures Positions?
2023-06-05
Summary:
Explore the strategy of clearing futures positions and essential considerations for investors when closing their positions in the market.
Clearing futures positions is a common trading strategy that can help investors achieve certain returns in the market. In the process of clearing futures positions, there are some basic information that needs to be understood.
Firstly, futures positions refer to the quantity of goods or currencies purchased or sold in the futures market, usually based on predictions of future prices. After establishing a position, investors need to closely monitor market changes and settle them in a timely manner.
There are several main ways to settle futures positions:
1. Closing: Traders can close their positions by trading in the opposite direction to close a futures contract they hold. For example, if a trader holds long contracts, they can close their positions by selling the same number of short contracts.
2. Delivery: At the expiration of a futures contract, traders can choose to deliver physical or cash to settle their positions. If holding long contracts, delivering physical goods means that the trader needs to pay a certain amount of underlying assets and receive a corresponding number of futures contracts. If cash delivery is chosen, the trader will receive or pay the corresponding cash settlement amount.
3. Disposal: If the futures position is not suitable for further holding, traders can choose to sell the position to other traders or trading companies. This usually occurs before the delivery date of the futures contract.
4. Compulsory closing: If the loss of a futures position exceeds the trader's margin balance, the exchange can carry out compulsory closing to protect the interests of both the trader and the exchange. In this case, the exchange will automatically trade in the opposite direction to close the position.
When closing positions, investors need to pay attention to the following aspects:
1. Choose the appropriate time: After the position is established, investors need to closely monitor market changes and choose the appropriate time to settle. Generally speaking, it is more appropriate to settle when the price reaches the expected level.
2. Setting a stop loss: After the position is established, investors need to set a stop loss to limit losses. The stop loss point should be determined based on investors' risk tolerance and market trends.
3. Controlling Positions: When establishing positions, investors need to pay attention to controlling their positions to avoid excessive trading. The size of the position should be determined based on the actual situation of investors.
Clearing futures positions is an important issue that investors need to pay attention to when trading in the market. By understanding the correct settlement method, investors can better manage risks and obtain certain returns in the market.
【 EBC Platform Risk Reminder and Disclaimer 】: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice.
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