A futures contract is a legal agreement in which the buyer and seller agree to trade a specific commodity or asset at a predetermined price at a future time.

By buying or selling a futures contract, you agree to buy or sell a certain amount of a commodity or financial instrument at a specific time and a specific price, with the exact delivery time determined by your trading contract. It is important to note that Tiger Securities does not currently support physical delivery, so for physical contracts, you need to close your position before the first notice day or the last trading day (whichever comes first). For non-physical contracts, positions need to be closed before the last trading day.

Futures trading has its unique advantages and risks.

In terms of advantages, futures trading can achieve the effect of risk diversification because the futures market includes various commodities and assets, such as gold, crude oil, stock indices, etc., which allows investors to make diversified investments. Secondly, futures trading has a leveraging effect, as investors only need to deposit a portion of the margin in advance to trade the full amount, thus enhancing the efficiency of capital utilization. In addition, futures trading allows for anticipation management, locking in future prices in advance and countering the risk of market fluctuations. Finally, futures trading allows investors to go long or short, with the possibility of making a profit regardless of the market trend.

However, futures trading also involves risks. Market risk can be caused by global economic conditions, policy changes, supply and demand, and other factors that cause price fluctuations, which may result in investment losses. Although leverage can magnify returns, in the event of an unfavorable market movement, investors may quickly lose the capital invested and may even incur additional debt.

Margin requirements vary depending on the specific futures contract you are trading and the exchange on which the contract is traded. You must confirm the margin requirements for each contract before you start trading.

Every futures contract has a specific expiry date and once it expires it cannot be traded. It usually takes a few months from the time of listing to the time of going off the market, and to observe the price movement of a contract over a longer period, the concept of a "master-linked contract" has been developed. The term "master" refers to the most actively traded contract, while the term "linked" can be interpreted as "connecting" the most active contracts of each period over time. A master-linked contract cannot be traded by itself; when you trade a master-linked contract, you are trading the most actively traded contract at the moment. If you are trading a master-linked contract, you should also be aware of the impact of the Expiry Month Change.

Contracts with cash settlement: You need to close your position on or before the last trading day, otherwise you may face the situation of forced liquidation by the system.

Physical delivery contracts: Magic Compass Holding does not support physical settlement, for this type of contract, you need to close your position on or before the first notice day or the last trading day.

Futures trading involves a high level of risk and investors should consider it according to their risk tolerance. You are advised to conduct thorough research and considerations before entering into futures trading.