In the process of futures trading, there are many professional terms and complex concepts, which can be a great challenge for beginners; however, it is these basic knowledge that forms the cornerstone of understanding and participating in the futures market. Mastering these basic knowledge can not only help you better understand market dynamics, but also enable you to make wiser decisions in trading.

What is a futures conditional order?

A futures conditional order refers to an order placed by a client with specified conditions. When the market conditions do not meet the triggering conditions set by the investor, the order will be saved in the trading software or conditional order server. Once the market conditions meet the set triggering conditions, the software or server will automatically issue the order set by the investor to carry out trading operations.

Through the setting of stop-loss, take-profit and other conditional orders, investors can better control trading risks, avoid losses caused by emotional trading, and reduce human intervention, enabling investors to respond more quickly to market changes.

What is dynamic stop-loss?

It refers to the strategy of adjusting the stop-loss point in real-time according to the changes in the market conditions. Compared with fixed stop-loss, dynamic stop-loss is more flexible and can adjust the stop-loss point in a timely manner according to the market situation to more effectively control potential losses.

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Compared with fixed stop-loss, dynamic stop-loss can more flexibly adapt to market changes, reduce the frequent triggering of stop-loss operations caused by market fluctuations, thereby improving the win rate and efficiency of trading. It also helps investors maintain calm and rationality, avoiding making wrong decisions due to emotional trading.

What is lock position?

It refers to the operation method of futures traders to open positions with equal quantity but opposite direction, so that no matter which direction the futures price moves (up or down), the profit and loss of the position will not increase or decrease. This method is also commonly seen in foreign exchange margin trading and gold margin trading, and is usually called lock position, lock order, and sometimes even beautified as "butterfly flying together".

Lock position provides an effective risk management tool, which can balance risks by establishing a hedge position, and also allows traders to maintain flexibility when the market is uncertain, waiting for more favorable trading opportunities.What is a reverse trade?

A reverse trade in futures refers to a situation where an investor, who already holds a position in a futures contract (i.e., a position), buys or sells the same type of futures contract again, but in the opposite direction to the original position, in order to close the position or adjust the position. In other words, if an investor originally holds a long contract (i.e., a contract to buy), a reverse operation would be to sell an equal amount of short contracts (i.e., contracts to sell). The reverse is also true.

Reverse operations can serve as a risk management tool, helping investors to control losses in unfavorable market conditions. For example, when an investor's long position is incurring losses, they can establish a short position through a reverse operation, hoping to profit from the decline in market prices, thereby compensating for the losses of the original position.

What is the basis?

The futures basis is an important concept in the futures market, reflecting the price relationship between the spot market and the futures market. Specifically, the futures basis refers to the difference between the spot price of a particular commodity at a particular time and place and the futures price of that commodity in the futures market. The calculation formula is: Basis = Spot Price - Futures Price.

When the futures price is greater than the spot price, it is called futures contango; when the futures price is less than the spot price, it is called futures backwardation. Due to the constraints of the futures delivery system, theoretically, on the delivery date, the futures price should equal the spot price, meaning the basis is zero. Otherwise, arbitrage opportunities would arise.

In summary, mastering these basic concepts allows for a deeper understanding of the mechanisms of the futures market and better participation in market trading.