Futures Trading: What is the basic analysis method in futures trading?

The so-called basic delivery method is an analytical method for predicting price movements from the actual supply of commodities (production volume and stock market volume) and the effect of demand on commodity prices.

How are commodity prices going? In the final analysis, it is the result of changes in the supply and demand relationship of commodities on the market. This is the basis of the starting point of basic analysis. Theoretically, according to the law of value, the determination and change of commodity prices depends on the supply and demand of the commodity. - In general, when supply exceeds demand, prices will drop, while supply falls short of demand, and prices rise. Therefore, price changes have a very close relationship with the supply of goods and demand.

1) Supply. Refers to the quantity of a commodity that a producer or a manufacturer is willing to sell to the market at a certain time, place and certain price level. At different price levels, the number of producers and manufacturers willing to supply sales is different. In general, the supply of goods is proportional to the price, the price increases, the supply increases, the prices I, 'decrease, and the supply decreases. However, for various different commodities, the degree of change in prices causes the supply to increase or decrease. The prices of some commodities have changed slightly, and the supply has changed dramatically. Some commodity prices have changed substantially, and supply has also changed little. This is the so-called “price elasticity of supply and demand” concept, which reflects the price changes. The sensitivity of supply changes.

In the long run, the general factors that affect the supply of goods include the total number of producers, the capacity of production equipment, the characteristics of products, the relative production costs of substitute products, social habits, the influence of laws and regulations, and policies. Most commodities show a low price elasticity of supply in the short term because production has a time gap between price rises and falls. Production can't be hastily due to a drop in time when prices rise or fall. Producers do not It may be rushed to change production schedules and arrangements frequently based on short-term changes in prices. For some commodities, in the long run, the price elasticity of supply will be low, but in the short term, it will show a high elasticity. For example, food products, whose annual supply is relatively fixed, are less sensitive to price changes, but because of Only one or two harvests are made each year, stored after harvest, and flowed into the consumer market in stages and in batches. If a certain price rises due to storage, then the supply to the market will increase, and vice versa.

2) Demand. It refers to the quantity of a commodity that a consumer or a user is willing to purchase from the market at a certain time, place and certain price level. Similarly, at different price levels, the number of consumers willing to buy is also different, which is also related to the characteristics of the commodity's rejection. In general, the demand for a commodity changes inversely with its price, that is, when the price rises, the demand decreases, and when the price falls, the demand increases. The consumer's demand for a certain impulse product mainly depends on: the consumer's real income or purchasing power; the number of consumers or users; the possibility and price of using alternatives; the personal preferences and choices of consumers.

There is also a problem of price elasticity of demand. Some products are non-essential products. When prices rise, demand will drop significantly. This will be the case for daily necessities. Some products, such as the necessities of life (grain, sugar, etc.), will maintain a demand regardless of price changes. More stable level.

Understanding the elasticity of the supply of goods and the price of demand is of great significance. It can make people aware of the extent to which the change in the price of a certain commodity's supply or demand changes its sensitivity to price changes.

3) Basic analysis. On the basis of analyzing the characteristics of supply and demand and their influencing factors, the relevant factors are integrated and analyzed to determine their collective effect on prices. Based on economic theory, analysts use mathematics methods to establish mathematical models. Through the use of "weight processing" for various factors affecting prices, mathematical models are input to derive price trends. However, because there are many factors that affect the price of commodities, it is difficult to carry out quantitative analysis, such as consumer psychology, so the basic analysis method places more emphasis on deduction, reasoning, and qualitative analysis.

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