Cotton futures

An important feature of trading different from stock trading is that futures have a short-selling mechanism, that is, futures have the opportunity to make profits regardless of their ups and downs, provided that we judge the market outlook accurately. The market outlook here can be minutes, hours, days and weeks after entering the market, and the result of misjudgment is the loss of funds. The occurrence of such risks is mainly due to investors' misjudgment of the trend. Under normal circumstances, investors who have no conditions for in-depth analysis of fundamentals should master the application of indicators to judge trends, mainly the application of the moving average system. According to the moving average system, there will be no big loss.

2. Risk of wrong admission time

The so-called risk of wrong timing means that investors may lose money when they enter the market because of wrong timing, even if they judge the late megatrend accurately, which will have a negative impact on operational psychology. The last time to enter the market is not the highest and lowest point on the market chart, because it is difficult to guarantee that every operation will enter the market at the top and bottom, but only once at the top and bottom. In other words, in a bull market, you only have one chance to short in the long term, and the chance of success is n times. Investors should wait patiently for the top and bottom signals or patterns on the chart to appear.

3. Risk of holding an overnight position

The short-term price of cotton futures fluctuates violently and the price continuity is poor, so it is often possible that the price will jump high or low. If the price of the position you hold moves in an unfavorable direction after overnight, it will cause you a big floating loss at the opening moment, but at this time your psychology is quite fragile, because the intraday high and low are often formed within 30 minutes after watching the market, and during this period, the intraday trend direction is very different and fluctuates greatly. If you hold a loss-making position, but when you close the position, you may be at the highest or lowest point within 30 minutes of opening the position. After the trend of 30 minutes a day comes out, you dare not chase it anymore because you have just been washed out.

4. Risk of overweight positions

The margin system of cotton futures trading determines that the profit and loss of cotton futures trading is effectively enlarged. If you use 10% to buy a commodity futures contract with a value of 100%, the profit and loss may far exceed the margin in your account before opening the position, which is the risk and charm of cotton futures trading. The risk of adding positions is quite harmful to investors in the early stage of opening positions. When you judge that the market is rising, don't intervene heavily. You can intervene to hold small orders to prevent the final suppression from hurting confidence.