How to prevent liquidation when doing foreign exchange_What are the methods to prevent liquidation
When we are operating foreign exchange, how can we avoid liquidation of our foreign exchange positions? ?How much do you know about liquidation? The following is what the editor brings to you how to prevent liquidation when doing foreign exchange. I hope it can help you to a certain extent.
How to prevent liquidation in foreign exchange trading
In order to prevent liquidation in foreign exchange trading, the following are some commonly used methods:
Manage risks: set appropriate settings stop loss level. When entering a trade, determine a pre-set stop loss point and execute the stop loss order immediately when the market price reaches or exceeds that point. This limits losses and controls risk.
Allocate funds appropriately: Avoid investing too much money into a single transaction. Reasonable allocation of funds can reduce the impact of each position on the overall funds and reduce the risk of potential losses.
Control the leverage ratio: Choose a leverage ratio that suits your risk tolerance for trading. Lower leverage usually means smaller risk exposure.
Do a good job in technical analysis: learn and apply technical analysis tools and indicators to better judge market trends and adjust trading strategies. Technical analysis can provide information about market trends, support and resistance levels, etc., helping investors make more informed trading decisions.
Keep Calm: Follow your trading plan and maintain a calm mind. Do not make impulsive trading decisions due to emotions or market fluctuations, which may result in excessive losses.
Keep abreast of market news: Keep an eye on the foreign exchange market and understand the release of important economic indicators, central bank policy changes and other market influencing factors. Keeping abreast of market information can help investors make more informed trading decisions.
How to prevent liquidation in foreign exchange trading
1. Remember to check the financial calendar from time to time. Checking the foreign exchange financial calendar can see what important data and important events there are on the day, and clarify the market situation. .
2. Observe the trend of the U.S. dollar index. Before trading in foreign exchange, pay more attention to the U.S. dollar index. Generally speaking, if the bull trend sees a low, go long, if the bear trend sees a high, go short. If there is a shock, don’t do it or if the short-term high is high, go short. Lower is more.
3. Pay attention to fund management and control positions. Novice traders can start with light positions and make steady progress. As experience increases, slowly increase your position.
How to calculate the foreign exchange liquidation ratio?
The foreign exchange liquidation ratio is determined by the foreign exchange platform, and different foreign exchange trading platforms have different liquidation ratios. For example, the liquidation ratio of FXCM is 100%, which means that liquidation will only occur when the trader's available margin loss reaches 0 when trading on the FXCM platform.
Therefore, it can be said that the probability of liquidation on the FXCM platform is much lower than that of other platforms. For example, on some platforms, the liquidation ratio is 50%. There is US$2,000 in the trader's account, of which US$1,000 is the available margin. When the trader suffers a loss, the position will be liquidated if the available margin in the account is less than US$500. On the FXCM platform, liquidation will only occur when the available margin reaches 0.
So is it better for the foreign exchange liquidation ratio to be higher or lower? For investors who are afraid of risks, it is naturally better to have a lower liquidation ratio, because even if the liquidation ratio is liquidated, they are still There is still half the funds in the account. However, if the liquidation ratio is low, the frequency of liquidation will inevitably increase. If investors do not have a particularly large amount of funds in their accounts, many investors may liquidate frequently.
How to avoid Bitcoin liquidation?
First of all, it is necessary to maintain a sufficient leverage ratio and a large enough margin fund to cope with large fluctuations in market prices. When the Bitcoin market price is rising, a smaller leverage ratio is a safer choice.
Secondly, investors can consider setting a stop-loss price. When the Bitcoin market price starts to fall, you can set a stop-loss price. Once the price reaches this price, your position will be automatically closed.
Finally, when the Bitcoin market price drops, remember not to blindly follow the trend and buy the bottom. Instead, you must have enough patience and calmness, pay attention to the market trend, and avoid blind operations. In the long run, continuing to pay attention to Bitcoin technology and development trends and implementing a sound investment strategy will have a positive impact on investors' long-term returns.
How to effectively prevent liquidated stocks from falling to the limit
The most direct reason for the stock falling to the limit is the background of China's continued economic decline and the gradual release of leveraged bull market risks, which will usher in a short-term adjustment trend.
Once a stock falls below the limit, it will be very uncomfortable for investors. If this situation can be avoided to a certain extent, it will be very helpful to investors' confidence. Therefore, whether from the perspective of profit pursuit or risk control, timely and effective avoidance of the risk of "limit-down stocks" is always a major step forward for investors to outperform the market in "structural" market conditions. "Limit-down stocks" are indeed high-risk investments, so you must be highly vigilant and try to avoid them whenever you can. However, "limit-down stocks" also have their own "laws" of operation. As long as you have a good mentality and operate properly, you can effectively avoid them. Operational risk.
The operational risk of "limit-down stocks" is generally manifested in the following three aspects: First, "bad risk" is the investment loss caused to investors by a sharp drop in stock prices due to bad news such as pre-performance losses. .
The second is the "morphological risk", which seems to be the risk of buying after the situation improves, and the third is the "good risk", which starts from the day when the good news is reported to the day when the stock price drops to the limit. During this period, the market value of the account significantly underperforms the index and other individual stocks. Operational risk;
Forbearance: Take advantage of the stable technical form and strong short-term trend to wait and see, and try not to increase your position. Many investors have the habit of trading based on technical forms and trend selection when trading securities. In fact, the probability of similar beautiful forms becoming investment traps is very high. Not only do investors who have not bought in should choose to avoid or not buy companies with unclear performance and "positive" reports, but investors who already hold chips in related companies should also not blindly cover their positions when the situation stabilizes and the short-term trend strengthens. The correct approach is: once a potential "limit-down stock" is discovered, not only should you not conduct "trading in the same direction" with a herd mentality, but you should also try to take advantage of the stable technical form and strong short-term trend to conduct "reverse operations." Even if you cannot sell high, you must at least ensure that you do not chase high prices to cover positions. To achieve this, it is inseparable from the necessary "ninjutsu" to maintain appropriate vigilance and not be fooled by temporary strong forms.
Prevention: You should avoid companies whose future performance is not clear enough and whose "good news" frequently appears in the newspaper, and try not to buy. At this time, investors may wish to be more cautious and adopt a strategy of "prevention" first and reverse thinking for those companies with unclear performance and many "positives". It is particularly important to think of problems and difficulties in a more complicated way. In actual operation, some potential "limit-down stocks" often have a lot of "good news" appearing in front of the public before they fall sharply, so not only should they not be sold but they should be bought.
Run: Once potential risks are discovered and there is a possibility of a limit drop, you should decisively choose to exit and try to leave the market as quickly as possible. In the short term, the biggest risk for "limit-down stocks" lies in the several trading days before and after the limit-down. Therefore, when it is discovered that relevant stocks have hidden risks and may fall to the limit, as long as you "stop when it is time to close", you can effectively avoid the risk of "limit-falling stocks".