Lesson 2: The Rise of Modern Futures Trading – OKEX OPERATING GUIDE
At the same time, merchant B wants to purchase gold after a month. Therefore, the exchange brokers a contract between the merchants A and B.
The buyer (merchant B) and the seller (merchant A) agree to trade 10 ounces of gold at USD2,100 per ounce a month later and each paid 10% of the total value (i.e. USD2,100) as margin.
Through trading futures contracts, merchant A offsets the price of the buy contract and makes a profit of USD1,000 without physical delivery. Merchant A realized that he only needs to spend 10% of his fund to complete a deal, and such leverage results in great volatility on his profits. He started to learn how to buy gold futures at lower prices and then resell them at higher prices.
Conclusion
OKEx cryptocurrency futures adopts a netting delivery model: our system closes all open positions at the arithmetic average price of the index price in the last trading hour instead of physical delivery upon contract expiry. We also offer perpetual swap trading without delivery and expiry dates.
You can learn more about our trading rules and profit/loss calculation with real-life examples in the next lesson. Meanwhile, this lesson shows how coin-margined futures works (other types of derivatives work in a similar way too), we will explain more in other lessons.
Published at Tue, 18 Feb 2020 09:58:22 +0000
