The main causes of the explosion are as follows:
1. leverage effect: gold futures and margin trading usually provide high leverage ratio, such as 1: 10 or 1:20, which means that investors can control large gold positions with a small amount of funds. Although this helps to improve the return on investment, it also increases the risk. When the market price fluctuates too much, investors may face huge losses, leading to short positions.
2. Market fluctuation: The price of gold fluctuates greatly due to many factors such as global politics, economy and monetary policy. When the market fluctuates violently, investors' positions may face great risks, leading to short positions.
3. Investor strategy: Some investors may be overconfident or blindly chasing up and down, and fail to adopt appropriate risk management strategies, resulting in failure to respond in time when the market fluctuates, and eventually burst positions.
4. Transaction costs: In gold futures and margin trading, investors need to pay transaction costs, such as handling fees and overnight interest. If investors hold positions for too long or the market fluctuates too much, the transaction cost may be too high, thus increasing the risk of short positions.
In order to avoid short positions, investors should pay attention to the following points:
1. Rational use of leverage: according to your own risk tolerance and market conditions, reasonably choose the leverage ratio to avoid the risks caused by excessive leverage.
2. Risk management: formulate a reasonable stop-loss strategy, stop the loss in time when the market trend is contrary to expectations, and avoid the loss from expanding.
3. Pay close attention to market dynamics: Pay close attention to changes in global political, economic and monetary policies, analyze their impact on gold prices, and adjust investment strategies in a timely manner.
4. Investment strategy: formulate long-term and short-term investment strategies to avoid blindly chasing up and down, and ensure rational investment decision-making.
In short, the short position of gold refers to the phenomenon that investors are forced to close their positions or short positions because of excessive market price fluctuations in the gold trading process. In order to avoid the risk of short positions, investors should use leverage reasonably, pay attention to market dynamics, formulate reasonable investment strategies and do a good job in risk management.