Risk of using leverage: Everything has two sides, because leverage, capital and income are amplified, and so are risks. Therefore, investors must think rationally about the magnification of 10 times, and how to use it varies from person to person. If investors who are well-funded and familiar with the futures market can use at least five times the leverage, investors with limited funds and little understanding of investment cannot use high leverage. It is easy to make the risk out of control.
Delivery risk: the real purpose of ordinary investors to invest in futures is to make money, not to buy soybeans and sell them in a few months. Theoretically, the spot price and futures price should be similar at the time of delivery. This similarity is the basis to ensure the futures market to play a hedging function, so that hedgers can fully hedge the risks in the spot and futures markets. However, in the delivery of real transactions, the prices of futures and spot markets often deviate from each other, making hedging impossible.
Risk of forced liquidation and short position: every trading day, exchanges and futures brokerage companies will settle accounts. If the investor's margin is lower than the specified proportion, the futures company will force the liquidation as required. Occasionally, when the market is extreme, there will be short positions, so all the funds in the investor's account will lose money. What's more, the futures company will have to pay a deposit with losses exceeding the account.
Characteristics of futures investment
Small but wide: paying 5 ~ 15% performance bond can control 100% virtual funds.
Transaction convenience: Because the main factors in futures contracts, such as commodity quality and delivery place, have been standardized, the contracts are highly interchangeable and liquid.
High efficiency: High transaction efficiency Futures trading enables traders to compete fairly under equal conditions through open bidding. At the same time, futures trading has a fixed place, procedures and rules, and it operates efficiently.
Two-way operation: you can buy and sell futures contracts after paying the deposit, buy low and sell high when the price rises, and sell high and make up low when the price falls.
Close the position at any time: Futures trading "T+0" can close the position at any time after grasping the trend.
High security: the performance of the contract is guaranteed. After the futures transaction is completed, it must be confirmed by the settlement department, and there is no need to worry about the performance of the transaction.