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What is the difference between futures platform and spot gold platform?

2024-01-09

1. Transaction object: The main difference between the futures platform and the "spot gold platform" is the transaction object. The subject matter of futures platform transactions is future goods, that is, goods that do not yet exist. It is a standardized forward contract. This means that futures trading is actually buying and selling a commodity in the future. In contrast, the spot gold platform trades are based on actual commodities, including agricultural products, metals and other basic supplies.

2. Trading contracts: Trading contracts on futures platforms are usually more focused on industrial materials or financial assets, such as metals, energy, etc. These contracts are usually large transactions involving large amounts of money and goods. The trading contracts of the spot platform cover a wider range of commodity categories, including various commodities in daily life, such as food, clothing, etc.

3. Margin ratio: The margin ratio in the futures market is relatively low, usually around 5%-10%. This means that investors can use less capital to control larger positions, so the leverage is greater and risks and returns are magnified. The margin ratio in the spot gold market is usually around 20%, with moderate leverage and moderate risk.

4. Trading base: The trading base of the futures market is usually large and is calculated in tons. Therefore, futures trading has a higher investment threshold and usually requires a larger amount of capital. The spot gold market has a smaller trading base, calculated in kilograms, and has a lower investment threshold, making it suitable for small investors to participate.

5. Trading hours: Trading hours in the futures market are limited, usually during the day, about 9 hours a day. The spot market can be traded 24 hours a day and is more flexible. Investors can buy and sell at any time as needed.

6. Trading method: Futures trading is conducted in the exchange, and is announced and traded in a centralized manner in accordance with policies and regulations, with high transparency. Spot gold trading is more flexible and can be traded at any place and at any time, and contracts can even be signed through one-on-one negotiation.

7. Delivery method: Futures trading has delivery date restrictions, and delivery or position transfer is required upon expiration. Spot trading does not have this restriction. As long as the account has sufficient funds, investors can always hold spot transactions.

8. Price formation mechanism: The futures market price is formed through open bidding, which is fair and transparent. This bidding method helps quickly discover market prices and provides investors with more trading opportunities. The formation of spot gold market prices is affected by a variety of factors, including supply and demand, regional differences, quality differences, etc. In addition, the spot gold market price may also be affected by regional supply and demand conditions, weather, politics and other factors.

9. In summary, there are significant differences between futures platforms and "spot gold platforms" in many aspects. When investors choose an investment platform, they need to comprehensively consider factors such as their investment objectives, risk tolerance, and investment experience. For those investors pursuing high risk and high returns, futures platforms may be a better choice. For those prudent investors who want to make small investments, the spot gold platform may be more suitable.

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