If the price of the day is close to the daily limit, it means that the rise of the day is strong. Isn’t counter-selling a short order going against the trend? Even if the general trend is bearish in the long run, it is not advisable to go against the short-term trend. If the general trend is also bearish, then you will double the contrarian operation. Going against the trend is tantamount to committing suicide?
The most important thing is that there is a danger of being caught off guard at any time near the daily limit and being buckled into the limit!
On the contrary, the same is true near the lower limit.
Even if you have good reasons to be bearish, you should place a short order at a price far away from the daily limit or do it the next day, otherwise you are risking being pushed back to the limit without warning? Then, your stop loss strategy and your small and broad-minded ideas will instantly become a laughing stock on paper!
It is easy to understand that it is not short at the upper limit and long at the lower limit, using a vivid metaphor, because it is simply hitting the muzzle of the gun.
So, what about going short "near" the daily limit and long "near" the lower limit?
That is teasing the enemy within the effective range of the enemy's gun! It's a walk in a jungle covered with nets!
As for some people going short on the daily limit and long on the lower limit, that is the most stupid thing in the futures market!
What does the daily limit mean? To use the analogy of spot goods, all the goods on sale that day were sold out, and there was an endless shopping queue behind them. They had to wait until tomorrow and try it at a higher price.
At this time, you took out the only inventory at home and sold it at a price that no one was willing to sell that day. I really don’t know whether you were out of kind-hearted charity or because your brain was flooded.
The lower limit means that no one is willing to buy at the lowest price allowed for trading in the market that day, and the crowds of sellers who want to sell at a lower price can only wait until tomorrow according to regulations.
At this price, people think about things like garbage but can no longer throw them away, but you just entered the market and bought them at a price that no one was willing to pay.
Are you discerning enough to see that treasures can be extracted from garbage? Even so, you can definitely buy it at a lower price the next day! Do you know that you are lucky that the person who threw the garbage to you is also laughing behind your back that you are a fool?
Of course, there are cases where you accidentally buy at the lower limit, and then the market reverses the next day and you make money. But what percentage can this account for? Is it worth emulating? A small gain can make a big difference in probability! We should use high probability to win small probability.
Just imagine if we hold a sell order ten times every time on the daily limit board, how many times will we make a profit? How many times will it take 100 times without losing money?