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Why You Should Consider Trading Futures In Hong Kong?

Hong Kong

Hong Kong’s stock market is a significant player in Asia. As a result, several financial instruments are available for traders and investors to take advantage of. One such instrument is futures trading which can be done through several exchanges, including the Hong Kong Futures Exchange (SEHK).

Many traders often think of Hong Kong as a city full of high rises and busy streets, bustling with life. But underneath the skyscrapers, there is another side to Hong Kong that many people do not know about. The futures market in Hong Kong is something more important than most traders realize, so you must understand its worth if you’re trading currencies or commodities.

The SEHK was started over 30 years ago as an exchange that allowed firms to hedge their commodity price risks. Over time it has grown into one of Asia’s major trading hubs where futures contracts on everything from thermometers to oil are sold and traded daily. Contract volumes have grown from just over 300 million USD in 2007 to nearly 2 trillion USD currently.

What is a futures contract?

A futures contract is an agreement between two parties that states that one party will purchase an asset at a specified time for a fixed price while the other party agrees to sell an asset at a specified time for a fixed price. The product being traded by these two parties usually has some connection with the actual physical commodity or stock from which it takes its value upon transfer of possession or some other relevant data.

Trade futures to expand your portfolio.

Most beginning traders concentrate on the task at hand. Still, experienced veterans of the financial markets know that knowing more than just your market can give you an advantage over other traders. So even though trading futures may be slightly different than what you are used to, opening a new door into a potentially lucrative aspect of finance might be precisely what your portfolio needs. Hong Kong has some of the world’s most innovative futures contracts, and it has an active market that is always ready to reward traders for their insight.

The yuan or renminbi (CNH) is a currency that many traders overlook when looking at possible trading opportunities. However, by trading CNH futures, you can get easy access to needed liquidity with ease. Most newbies don’t understand how simple this contract is compared to other derivative instruments. The open interest of HKD FX Futures grew from $3.5bn on 20 May 2010 to $4126 on 31 Dec 2014, while the notional outstanding grew from $0 during Q1-Q2 2009 and $100bn in late 2011. As the Chinese economy shows signs of rejuvenation, HKD FX Futures are becoming an increasingly popular way to trade the yuan.

Develop a trading strategy

Trading futures may be one of the least risky trading opportunities available because you can set your stop-loss point based on how much capital you risk losing per contract. If you develop a good trading strategy and follow it well, this type of trading can keep you in many excellent positions without risking too much money at any given time. 

Most people who aren’t familiar with futures contracts think they’re far too risky for their tastes. Still, as long as you choose a contract that is liquid enough and has a high enough open interest for your comfort level, there’s nothing wrong with getting started; the only risk is to your reputation. Still, suitable trading is all about minimizing that risk. 

Final Word

Don’t think of futures contracts as a complicated thing that requires extensive research; simply put it at the back of your mind and start looking for great opportunities with spot forex. It will be well worth expanding into more challenging markets like the yuan or US dollar index because things are not always what they seem on the surface in financial circles. New traders who want to trade product futures are advised to contact an experienced online broker from Saxo Bank.


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