Perhaps the reason why many people who plan to do futures have not stepped into futures so far is because their funds are not enough. Therefore, Bian Xiao specially brought you Stock Futures, hoping to help you.

What are the futures of stocks?

Stock index futures: this is the most common stock futures, and it is a market index futures contract to measure the overall performance of the stock market, such as the Standard & Poor's 500 Index and the Dow Jones Industrial Average.

Single stock futures: Some stock futures contracts allow investors to buy and sell specific stocks. For example, the domestic Shanghai and Shenzhen 300 stock index futures contract is a single stock futures product.

Stock option: Stock option is a financial derivative, which provides the right to buy or sell stocks at a specific price within a specific time without actually owning the stocks. Stock options can be traded in the options market.

What's special about stocks?

Equity represents ownership: holding shares means holding shares in the company, and shareholders have the right to participate in the company's decision-making and share the company's profits.

High risk and high return: Compared with other investment tools, stocks usually have higher risks and potential returns. The stock market is volatile, and investors may face losses, but they also have the opportunity to get higher return on investment.

Higher market liquidity: Compared with other investment tools, the stock market usually has higher market liquidity. Investors can buy and sell stocks relatively easily.

Will there be a shortage of futures funds?

Regardless of the amount of funds, there is a risk of short positions in futures trading. The following are the possible causes of the explosion:

Leverage: Futures trading adopts leverage mechanism, and investors can control contracts with large value only by paying part of the margin. Although leverage can amplify profits, it also increases the potential risk of loss. If the market is unfavorable and the loss exceeds the margin level, it will trigger forced liquidation and lead to short positions.

Improper risk management: Risk management is a very important part of futures trading. If investors fail to correctly assess and manage risks, such as setting appropriate stop-loss positions and misjudging market trends, they will easily face greater losses and may lead to short positions.

Market fluctuation: The futures market price fluctuates sharply, especially for high-risk varieties. When the price fluctuation exceeds the range that investors can bear, it may cause huge losses and lead to short positions.

Lack of experience and knowledge: For investors who lack experience and knowledge, futures trading may have higher risks. Lack of market understanding, technical analysis ability and trading strategy will increase the probability of making mistakes and lead to short positions.

Technical failure or unexpected events: In futures trading, technical failure, network delay or other unexpected events, such as sudden market changes and political events, may also lead to drastic price fluctuations, which may lead to the inability to close positions in time and cause huge losses.

To avoid short positions, investors need to have a deep understanding of the characteristics and operating mechanism of the futures market, have a good sense of risk management, reasonably control the leverage ratio and formulate appropriate trading strategies. At the same time, it is suggested that investors can choose small transactions at first and gradually accumulate experience and knowledge.

Factors affecting warehouse explosion

1. leverage ratio

The futures market adopts leveraged trading, and the leverage ratio of each variety is different. The higher the leverage ratio, the greater the profit and loss of a single transaction and the higher the corresponding risk.

2. Market fluctuation

If the market fluctuates greatly, it is easy to cause investors to lose money. For example, at the beginning of 2023, affected by global economic recovery, geopolitical ZZ risk and other factors, international crude oil prices rose sharply, resulting in huge losses for some investors.

3. Its own financial strength

If investors' own financial strength is weak and their ability to take risks is low, they are prone to short positions.

4. Psychological greed

If an investor has too high expectations and goals because of psychological greed, or pursues high returns unrealistically, it will easily lead to short positions.

Will the spot futures explode?

Spot trading also has leverage, and when the margin is insufficient, the system will burst the position if it is forced to close the position.

Short positions generally appear in extreme markets, and the higher the leverage, the greater the probability of short positions, and the lower the leverage, the lower the probability of short positions.

For example, under the leverage of 100 times, when the subject matter purchased by investors rises by 1%, the yield of long investors reaches 100%, and the loss of short investors is 100%, that is, short positions appear; If its leverage is 50 times, when the subject matter purchased by investors rises by 2%, the yield of long investors will reach 100%, and the loss of short investors will reach 100%, that is, there will be short positions.

Therefore, in the process of futures trading, investors should make rational use of their leverage, operate lightly, try to ensure that they have enough margin, and set up a stop-loss and profit-taking position after making orders.