Analysis On The Behavior Of Highly Leveraged Investors In China’s Futures Market

Futures market is one of the most important financial derivatives markets in China.According to the purpose of participating in futures trading,futures traders can be basically divided into hedgers and speculators.Hedgers in futures trading is the purpose of the use of the futures market for hedging transactions,in order to reduce the risks of price fluctuation,ensure normal production and business profits,and speculators to participate in futures trading purpose contrary to hedgers,they are willing to bear the risk of price fluctuations,hope on a small amount of money to gain more profit.In the futures market,the participation of speculators in trading can increase the liquidity of the market.Without the participation of speculators,the futures market’s two functions of risk avoidance and price discovery cannot be realized.In the futures market,the investors who use matching funds are an important part of the speculators.Futures matching,a process in which a firm lends a certain percentage of funds to its clients so that the clients invest in futures trading.The clients use the borrowed funds to increase leverage and gain higher profits,but also take greater risks.Previous studies have found that individual rationality in traditional theories is challenged both in terms of individual beliefs and individual preferences.In terms of beliefs,individuals often infer the probability of occurrence based on personal subjective experience rather than Bayes’rule when making decisions,showing representative intuitive inference.Individuals also have the tendency of herd effect,disposition effect and positive and negative feedback effect in the decision-making process.This paper finds that some highly leveraged investors using capital allocation in China’s futures market tend to have disposal effect and positive feedback,and the factors affecting the orders of investors with different genders,age groups,types and trading varieties are also quite different.The purpose of this paper is to study the trading behavior of highly leveraged individual investors in the futures market in China,in order to help understand the individual characteristics and behavior patterns of these investors in the futures market,and help to analyze the sources of risks in the futures market.