dognovel Chapter 21: The Age of Daring and Taking Risks!
Chapter 21: The Age of Daring and Taking Risks!
"Electronic trading platforms were introduced from abroad, originally referring to the electronic auction platform used by the Chicago Mercantile Exchange for matching transactions."
In 2004, the Shouguang local government, drawing on the margin system of the futures market, formulated the "Shandong Shouguang Vegetable Electronic Trading Market Trading Management Measures".
Starting with garlic, the most influential vegetable variety, standards for garlic trading were established.
This includes specific rules for regional price differences, grade price differences, and the delivery of substitutes.
In May 2005, the first vegetable trading center in the country was established in Shouguang.
This refers to the Shouguang Vegetable Electronic Trading Market Co., Ltd.
As Lin Qi spoke, he spread the map he had bought at the station on the table and pointed to the location of the Broadcasting Building.
This is Lynch's destination.
The uncle and Zhang Haozhe listened to his introduction as if they were hearing gibberish.
Zhang Haozhe scratched his head, puzzled, and asked, "Dalin, I still don't understand. What exactly is an electronic trading platform?"
"It refers to private agricultural futures trading."
Now that we've brought them on board, we need to explain these basic concepts to them.
Therefore, Lynch patiently and carefully explained: "First of all, you need to know what futures are."
Let me give you an example. Imagine a farmer who grows wheat. He planted autumn wheat in the spring, but he was afraid that the price of wheat would drop in the second half of the year and he wouldn't be able to sell it for a good price.
Another bakery owner is worried that wheat prices will soar in the second half of the year, making raw materials too expensive and causing him to lose money.
Then the bakery owner found the farmer and signed a contract.
Both parties agreed that in June, regardless of whether the market price of wheat rose or fell, he would buy the wheat from the farmers at a price of 1 yuan per kilogram.
The contract they signed is called a futures contract.
If you buy fried dough sticks on the street, the vendor will fry them fresh, and you pay in cash on delivery; that's called a spot transaction.
Futures are essentially buying goods or services in advance for a future date, hence the name "futures." Do you understand?
"clear."
Zhang Haozhe nodded: "It's just leasing land! When the market was good, didn't a lot of bosses come to the village to lease land to grow vegetables?"
"That's one way to understand it."
Lynch continued with the analogy: "Now it's March, and the price of wheat has risen to 1.2 yuan per kilogram."
The bakery owner took one look and thought, "This price is pretty good!"
If we can buy the wheat now, we can resell it and make a profit of 2 cents per kilogram, a sure thing.
But the wheat is still in the field; it's not harvest time yet.
However, at this time, the owner of another flour mill thought that the price of wheat would continue to rise.
By June, the price might rise to 1.5 yuan per kilogram.
So he approached the bakery owner, wanting to buy the futures contract.
The bakery owner thought it was a good idea to make a steady profit of 2 cents per kilogram, so he sold the futures contract to the flour mill owner at a price of 1.2 yuan per kilogram.
This transaction is a futures transaction.
Lin Qi's explanation was easy to understand, and even his uncle understood it: "In other words, they're not selling wheat, they're selling contracts."
"right."
Lin Qi smiled and praised, "Uncle, you're quite perceptive!"
"That's right!"
Zhang Xin proudly tossed his side-swept bangs: "Back then, I just didn't focus on my studies, otherwise I would have gotten into a good university."
"Of course."
Lin Qi nodded repeatedly, indicating his agreement.
"Huh? Dalin."
Zhang Haozhe couldn't help but ask, "What about the farmers who grow that kind of wheat? If wheat prices go up, won't they earn less?"
"But he broke even!"
Lin Qi explained: "What farmers want is safety, and the price of 1 yuan is the agreed price."
In June, regardless of the market price of wheat, it must be delivered at 1 yuan.
The farmer earned that one yuan safely and securely.
Who knows, by June, the price of wheat might drop to 80 cents a pound, and farmers could even earn an extra 20 cents?
"What if the price of wheat drops to 80 cents?"
Zhang Haozhe asked curiously, "Then didn't the bakery owner and the flour mill owner both lose money?"
"This is the core of futures trading."
Lin Qi dipped his chopsticks into the mutton soup and drew a line graph on the table: "In the futures market, everyone can buy that wheat contract, which is a futures contract."
The current price is 1 yuan. If you think wheat can rise to 1.5 yuan in June, then you are bullish.
You now spend 1 dollar to buy a futures contract.
By June, wheat prices had indeed risen to 1.5 yuan. If you sold your contract, you could earn a 0.5 yuan profit. That's what we call making a profit.
If you think wheat prices will fall below $1 in June, then you should short it.
If the price really drops, you can still profit from the difference.
"It's just a matter of buying big or small!"
My uncle remained concise and to the point.
"almost."
Lin Qi pointed to June on the line chart: "Anyway, futures contracts can be resold indefinitely before they expire."
As long as you can make the right move, you can profit from the price difference.
"Who can tell whether wheat prices will rise or fall?"
Zhang Haozhe scratched his head: "Isn't this just like gambling?"
"For ordinary retail investors, it's certainly similar to gambling, but real traders rely on their understanding of the market."
Lin Qi moved closer to Zhang Haozhe, his expression becoming even more serious: "Let's not talk about wheat now, let's talk about garlic."
About 40% of the garlic in the country comes from Shandong.
The main production area is in Jinxiang County, Jining.
Jinxiang County is known as the "Garlic Capital of China," with a total garlic planting area of over 2 million mu (approximately 133,333 hectares) in the county and surrounding areas, accounting for a quarter of the national total output.
This production volume is sufficient to determine the price in the national market.
If I knew the exact garlic planting area around Jinxiang County this year, I could estimate how much garlic Jinxiang County would produce this year.
If I could know how many cold storage facilities are around Jinxiang County, how much garlic is stored in them, and how many orders the distributors have.
Then I can predict the price trend of garlic this year.
This is what I asked you to do.
"What? Me?"
Zhang Haozhe was shocked: "Can I handle something this big?"
"You can do it, I believe you can."
Lin Qi patted his knee and said seriously, "I just need you to find out the number of cold storage facilities around Jinxiang County, and the amount of garlic stored in those facilities."
Check as many order numbers as you can find; I only need a rough estimate.
You can try to ask; there are many ways.
Offer the security guard a cigarette and start a conversation.
They impersonated distributors and inquired with the cold storage owners.
Anyway, if you get caught, at most they'll scold you a couple of times, but they won't really hurt you.
If you can accomplish this, you'll never lack food, no matter where you go in the future.
As he spoke, Lin Qi patted him on the shoulder again: "Think it over carefully."
This is a test for Zhang Haozhe.
In fact, Lynch didn't need this data at all, because he already knew that the price of garlic would skyrocket.
But his purpose was to cultivate Zhang Haozhe's information gathering ability.
He wanted to cultivate Zhang Haozhe into a top-notch information provider.
He also believes Zhang Haozhe has this potential.
Zhang Haozhe hesitated for a long time, but did not answer.
Suddenly, he got up and went to the boss to ask for two bottles of beer.
Back on the table, he opened a bottle, poured a full glass, and gulped it down.
He drank too quickly and choked, coughing until his face turned red.
After recovering, he wiped his mouth and, as if to encourage himself, gritted his teeth and said fiercely, "Damn it! How many times in life do you get to fight like this! Let's do it! What the hell are we afraid of!"
Seeing that he made up his mind so quickly, Lin Qi couldn't help but be a little surprised.
Lin Qi originally thought he would have to use more words!
I didn't expect Zhang Haozhe to make up his mind so quickly.
However, when Lin Qi saw the mixture of excitement and trepidation in his eyes, along with a fierce drive, he understood.
He's only eighteen years old!
They are at the age when they are fearless and daring to take risks!
So, without saying a word, Lin Qi poured three glasses of beer and picked up his glass.
"I think we should remember this day, March 16, 2009. Today marks the beginning of our soaring success! Cheers!"
"Cheers!"
"Cheers!"
The three beer glasses clinked together, creating a shower of beer foam.