The first thing investors who switch from the stock market to the futures market notice is that in addition to the opening price, the highest price, the lowest price, the closing price, the volume of transactions and the amount of transactions, two new data, namely the settlement price and the holding volume, are published daily in the futures market. Futures holdings refer to the total number of outstanding contracts in a given contract held by an investor. Holdings are equal to the sum of the number of outstanding and unlisted positions in the contract. It is worth noting that in outstanding contracts, the number of outstanding positions is always equal to the number of unlisted positions.
The concept of futures holdings is similar to that of a stock; when a contract is first listed, the contract holdings are zero. If only investor A is bullish and investor B is bearish, they will buy and sell an equivalent contract at a mutually agreed price, and the contract will have the corresponding number of holdings after the transaction. The stock exchange is unchanged before the distribution or increase, but the futures contract holdings can change at any time during the trade.
If the number of open positions in a transaction is greater than the number of positions, the holding volume will increase. If the number of open positions in a transaction is less than the number of positions, the holding volume will decrease. If the number of open positions in a transaction is equal to the number of positions, the holding volume does not change, but only changes hands between different investors.
Holdings are an indicator of the activity and liquidity of the futures market, and when the price reaches or approaches a certain price, it affects the ability of investors to buy and sell, thus affecting the change in the holdings. As you can see, holdings are a warning tool in the futures market. The application of holdings is worth investigating and experiencing by investors.
The first: increased volume of transactions, increased holdings, rising prices. This combination indicates active trading, buyers are more powerful than sellers. Although more space is being raised, new buyers are proactive and are buying more, following the price, indicating that more people see the aftermarket as a higher upside space.
The second type: decrease in trading volume, decrease in holdings, increase in price. This indicates a more open atmosphere of intense expectation, decreased trading, decreased holdings and increased prices, indicating that the empty holder admits, begins to actively replenish the equilibrium position (i.e. buy a hedge) to promote the price, resulting in a price increase in the process of decreasing the holding volume.
Holding volume research covers two main directions, one is to study the variation of multiple positions held by each member, with the aim of finding the members with the highest correlation between the position change and the price move. In the study, he has found that once a member holds a position in the top 20 (only the top 20 published), there is an 80% chance of a breakthrough in favor of the member's holding direction, and the accuracy is high. This indicates that the client of the member has either a more than imagined judgment of the situation, or has a thousand-silver relationship with the principal (no precision is the principal), always preempts the rise.
Another method of studying holdings is to study the relationship between stock prices, holdings, and trading volume. Theoretically, there are three possible directions for price movements, i.e. unchanging, rising, and falling, but considering that the probability of price stagnation is very small, even if it is momentary, only the rise and fall are considered in the actual study. Thus, there are only eight possible combinations of price, holdings, and trading volume.
The third combination: increased trading volume, decreased holding volume, price rise. This combination indicates the active equilibrium of the overhead. If it appears at the bottom, it is characterized by a small price rise, because the price has fallen to the bottom, the overhead mentality is good, and there is a lot of flexibility, not to pull up immediately. But if it appears at the top, the overhead is in a hurry to escape from the overhead, chasing the price, while the overhead is only in the high hanging list passive equilibrium, there is no active pressure force, thus showing a significant upward characteristic.
The fourth combination: increased trading volume, increased holdings, decreased prices. This indicates a large number of oversold positions, but the overlookers' initiative to increase the position, chasing the price sell. The reason for the persecution of the sellers is because they judge that the price still has a large falling space. But the majority of the readers are unwilling to admit to the loss, and also at a low level passive increase.
The fifth combination: decreased trading volume, decreased holdings, decreased prices. The combination indicates that the number of vacancies decreases the trading and tends to look forward, but the majority is in active equilibrium. The decrease in trading volume indicates that the majority is more rational, without urgency, but seeking the ideal price, so the price decreases slowly, but the decline will maintain a trend.
The sixth combination: increase in trading volume, decrease in holdings, decrease in prices. The combination shows that the majority of the holders are interested in trading, but the majority of the holders are not willing to continue to increase their positions, while the decrease in holdings and the decrease in prices show that the majority is in a hurry to break even, chasing the price to sell the break even, and the driving force is mainly from the loss of the majority. Therefore, once the price drops sharply, once the holding volume begins to increase, it shows that more people have begun to intervene and the majority who think they are flat, the price may rebound significantly.
Translated from the original Chinese