In the financial market, long positions and short positions are one of the most familiar terms for investors. They respectively represent the strength of buyers and sellers in the market. In fact, the comparison between long positions and short positions in the securities market can be represented by a more intuitive data, that is, net long positions.

The net long position refers to the difference between the long and short positions held by financial market participants, which can be obtained simply by subtracting the short position from the long position. For example, there are 1000 positions for longs and 500 positions for shorts. At this time, 500 long positions and 500 short positions are hedged against each other, which is equal to zero, and the additional 500 positions cannot be hedged. This is called a net long position. The number of net long positions is a key factor in pushing up prices, and it is also the remaining purchasing power after the competition between longs and shorts.

What does net long position mean

It should be noted that if the speculative net long position is positive, and the bank and others buy futures and options to limit losses and close the risk, then their net long position is negative, but this does not mean that the bank is short. The market also believes that spot prices will fall. The reason they want to buy short orders is because they are afraid of losses caused by changes in spot price trends. This is just to hedge financial risks, just like buying insurance.

Net long position: total long position minus total short position. For example, there are 10,000 positions for longs and 7,000 positions for shorts. At this time, 7,000 long positions and 7,000 short positions are hedged against each other, but the additional 3,000 positions cannot be hedged. This is called a net long position. The number of net long positions is a key factor driving up prices. This is the purchasing power remaining after the bulls and bears compete.

Net short position: total short position minus total long position. For example, there are 5,000 long positions, 10,000 short positions, and 5,000 long positions and 5,000 short positions are hedged against each other. The extra 5,000 short positions cannot be hedged. This is called a net short position. The net short position is a key factor in restraining the price decline, which means that the short position wins the net position after the end of the contest between the strength of the long position and the short position.

In addition to the net long position mentioned above, what is the net position can also be expanded.

Net position refers to the difference between the long and short positions a trader holds in the market. Generally speaking, the long and short positions in futures are mostly buying directions, while short positions are buying directions.

For example, if a trader sells 100 contracts and buys 80 contracts, his net short position is 20 contracts; if he sells 120 contracts and buys 150 contracts, his net long position is 30 contracts .

When conducting risk management, calculating the net position is very important. Only by knowing how much risk you are facing can you accurately estimate the risk that the company may face.

What is the difference between a net long position and a net short position
For soybean companies, the specific calculation method is as follows: the net spot position is soybeans, soybean meal and stock soybean oil, minus the sold and undelivered quantities. Including factory inventory, port (terminal) inventory, overseas inventory, etc.

The hedged futures position includes the futures position of the Dashang Institute and the CBOT position. These two positions need to be converted into tons and added to the net spot position to form the final comprehensive net position. Since it is difficult for the workshop of the crushing enterprise to accurately count the stocks of soybean meal and soybean oil, and sales and production are rolling every day, the calculation result of the comprehensive net position of hedging may only be an approximate value.

In the conversion of the comprehensive net position, the squeezing rate of soybean oil should be considered, and soybean meal and soybean oil should be converted into soybean equivalent to facilitate futures operations.