TD, which stands for T plus D, refers to the so-called deferred trading.

What is "T plus D"? It refers to the standardized contracts uniformly established by the Shanghai Gold Exchange, stipulating the delivery of a certain quantity of underlying assets at a specific time and place in the future.

Please note that gold TD trading involves a standardized contract, which is also a virtual investment product. What does "TD" mean here? T stands for Trader, the first letter of the English word for trading, and D stands for Delay, the first letter of the English word for deferral, belonging to the category of spot trading, situated between stocks and futures in terms of capital.

1. Matching Trading

In fact, its trading model or principle is still derived from futures. The characteristic of the trading is matching trading, which is what we call TD in our country.

What is matching trading? It is actually called market trading in contrast. Matching trading means that customers A and B, all customers quote within the exchange, A sells and B buys; if your prices are suitable, you two trade, and the exchange only charges a transaction fee, which is called matching trading.

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The counterpart to it is called market trading. What is market trading? It is when the exchange or a certain institution provides the price, and customers A and B both trade with the institution. The institution provides a price for A to trade with me, and B also trades with me.

2. Margin Trading

So-called margin trading is leveraged; you pay a certain margin, and then the institution provides the funds you lack for trading.

For example, the Shanghai Gold Exchange requires a 7% margin, and various banks float on the basis of the 7% margin at the Shanghai Gold Exchange, such as some banks offering a range of 9% to 14%.Let's take an example. Suppose you trade with a 10% margin, for instance, I buy one kilogram of gold, which would typically cost about 200,000 RMB. If I use a 10% margin trade, then I only need 20,000 RMB to purchase a contract. If the price of gold rises by 1%, let's say the contract is worth about 200,000 RMB, and it increases by 10%, then you've made a profit of 20,000 RMB.

If you don't use margin trading and trade with actual funds, you buy goods worth 200,000 RMB with 200,000 RMB, and if it rises by 10%, I make a profit of 20,000 RMB. What is your rate of return? 10%.

However, if you use a 10% margin trade, how much principal do you need to provide? You only need to put out 20,000 RMB to buy a contract worth 200,000 RMB, and it also rises by 10%, you make a profit of 20,000 RMB, what is your rate of return? With a principal of 20,000 RMB and a profit of 20,000 RMB, your rate of return is 100%. So this is one of the advantages of margin trading.

But everyone must pay attention to the fact that the advantage is also its disadvantage. What does this mean?

If you are right about the direction, you make money, and your funds can double very quickly, with a high rate of return. But if you are wrong, your margin trade, your money will also be lost at the same speed, and eventually can be reduced to zero, meaning your margin is completely lost.

For example, in the example just given, you bought gold to rise by 10%, but it did not rise, it fell by 10%, and your 20,000 RMB is lost, becoming 0. This is where margin trading is different from trading in our stock market. In the stock market, whatever you buy, as long as the stock does not delist, theoretically it cannot fall to zero, and it may rise again one day. As long as you do not sell, the loss is always on paper.

However, with margin trading, your margin is very likely to be reduced to zero, and it's gone. If you do not add more margin, you cannot continue trading.

3. Two-way trading

When we buy stocks, it is one-way, buying low and selling high, we cannot short, you cannot say when PetroChina rises to 40, you think it will fall, you short oil, it is not possible.

But there is an indirect way, which is financing and securities lending. The securities lending business is actually an indirect form of short selling, a short selling mechanism. In the TD market, it is two-way trading, you can both go long and short.When you anticipate a rise in gold prices, you go long, and if the price goes up, you make money. If it falls, and you believe it will decline, you can also make money by short selling.

4 Time Segment Trading

China's TD market does not operate on a full 24-hour trading schedule; there are one or two hour gaps, divided into several time segments. This segmented trading is actually a disadvantage of TD trading.

Since the international market trades continuously for 24 hours, it's possible that during the breaks in the Chinese market, significant market movements occur in the international market. This often leads to large gaps or jumps when the TD market reopens.

If your trading direction is wrong, it could result in substantial losses or even the risk of a margin call. TD trading is suitable for traders with a higher risk tolerance, as there is a possibility of a margin call.

Of course, risk and return are always directly proportional. There is the potential for high returns, but also the possibility of significant losses. Therefore, it is suitable for traders with a higher risk preference.