When we are doing futures, if we have sufficient funds, can we avoid the explosion of positions perfectly? I believe that people who have a basic understanding of short positions think so, but is this really the case? The following is for you from Bian Xiao. Will there be enough futures funds to explode? I hope you like it.
Will there be enough money for futures?
Whether the funds are sufficient or not, there is a risk of short positions in futures trading. The following are some possible reasons for the explosion:
Leverage: Futures trading uses leverage mechanism, and investors can control contracts with greater value only by paying part of the margin. Although leverage can amplify the profit potential, it also increases the 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.
Market fluctuation: The futures market price fluctuates sharply, especially for high-risk varieties. Even if the funds are sufficient, if the market suddenly reverses or fluctuates abnormally, investors may not be able to take action in time, resulting in huge losses and may lead to short positions.
Improper risk management: Good risk management is very important for futures trading regardless of the amount of funds. 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.
Lack of experience and knowledge: Futures trading requires a deep understanding of market mechanism, technical analysis and trading strategy. Even with sufficient funds, if investors lack experience and knowledge, they are prone to make mistakes or blindly follow suit, increasing the probability of short positions.
Technical failure or unexpected events: technical failure, network delay or other unexpected events may occur during futures trading, such as market mutation and political events. These factors may lead to failure to close positions in time or huge losses, which may lead to short positions.
In order to avoid the risk of short positions, investors should have a good sense of risk management, reasonably control the leverage ratio, make a clear trading plan, and always pay attention to market conditions. In addition, continuous learning and experience accumulation are also very important for improving trading ability and coping with risks.
What was the cause of the explosion?
1, the position is overweight, the margin leverage is relatively large, and it has the ability to resist risks and is easy to explode.
2, the unilateral trend of the market, do not know how to stop loss in time, leading to short positions.
3, frequent excessive trading, there is no complete trading system.
4, poor risk control ability, will not control risks and so on.
How to avoid warehouse explosion
1. Rational allocation of assets
Investors should rationally allocate assets according to their actual situation and risk tolerance. Don't put all your money into the futures market.
2. Control risks
In futures trading, investors should set a stop loss point and strictly implement it. At the same time, the market should be fully investigated and analyzed before trading.
Step 3 avoid hype
Don't blindly follow the trend to speculate on popular varieties or follow the so-called "big brother" operation. This can easily lead to being trapped or exploding.
Keep calm
Keep a cool head in the transaction and strictly follow your own plan. Don't make a wrong decision because of mood swings.
How long does it take for investors to explode under the leverage of 100 times?
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; When the subject matter purchased by investors falls by 1%, short investors will gain 100% under the leverage of100 times, while long investors will lose 100%, that is, short positions. Therefore, when the leverage of futures is 100 times, when it falls 1%, (up 1%) makes long 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.
Difference between spot market and futures market
Simply put, it is to buy and sell physical objects in the spot and futures contracts in the futures market. Therefore, the difference between spot market and futures market is as follows:
1, the transaction mode is different: in short, both the buyer and the seller think that the transaction can be concluded. However, the purpose of the futures market is not to get the real thing, but to worry about the future rise and fall of the spot, so it can be hedged or arbitrage.
2. trading places is different: the futures trading market is flexible and changeable, which is not affected by the trading time and place, and can be traded at any place. However, futures can only be traded on futures exchanges, and futures trading must be conducted in an open and centralized manner according to law. China Commodity Futures Exchange is owned by Dalian Commodity Futures Exchange and Zhengzhou Commodity Exchange.
3. Different guarantee methods: spot transactions are protected by contract law, but the futures market implements the margin system. If you don't exercise your rights according to the contract at maturity, you will lose the deposit.