Inferior level and priority are twin brothers, which are very common arrangements of risks and benefits in financial products. Structured trust products issued by trust companies can purchase priority trust products or inferior products in the same product.
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At the same time, strict risk control should be set up to ensure the principal security and fixed income source of priority beneficiaries.
Priority should be given to interests and protection. If a loss occurs, the risk borne by the first inferior is lower than that of the last inferior, so the priority income is lower than that of the last inferior. On the other hand, because it is necessary to lose the sub-grade first when encountering losses, the risk borne by the sub-grade is higher than the priority, so if the income is obtained, the income obtained by the sub-grade is naturally higher than the priority.
Inferior level and priority are twin brothers, which are very common risk/benefit arrangements in financial products. Structured trust products issued by trust companies can purchase priority trust products or inferior products in the same product.
Priority beneficiaries shares a lower rate of return and bears less risks, while poor beneficiaries bear high risks and get high returns. Generally speaking, in terms of income, the priority will remain relatively certain and there is an upper limit on the expected rate of return;
However, there is no clear rate of return target for the inferior level. In the simplest priority/inferior level structure, after paying the priority income, all the residual income generated by product investment belongs to inferior level.
When the investment loses money, it will be absorbed by the next level first. If the next level loses money completely, it will lose its priority. Therefore, from the perspective of risk, the secondary level represents the level with the highest risk, while the priority level is the level with relatively low risk.
Other strategies
Martingale strategy is actually a gambling strategy, which was widely known in Europe not long after it originated in France in the18th century. Theoretically, this strategy will never lose money.
Start with the unit bet, double the bet after each loss, and return to the unit bet after winning. The advantage and temptation of Martingale's method is that the price doubles after each loss, so the next time you win money, you can always win back all the previous losses.
But the bet of a unit (you can calculate it yourself) will increase very quickly when there are a series of losses, and you may go bankrupt before you win the bet. In order to prevent well-funded gamblers from successfully using this strategy, all casinos have set a maximum bet limit.
In order to accurately judge when a trend begins and ends, traders spend a lot of time studying many judgment methods. But all roads lead to the same goal, and all effective methods have some very similar characteristics Trend-following method can create considerable profits and has always been invincible, but it is not easy for most people to stick to this strategy for several reasons.
First, megatrends rarely appear, which means that the failure probability of trend tracking strategy is far greater than the success probability. For a typical trend tracking system, 65%~70% of the transactions may be losses.
Second, the trend tracking system will not only fail when there is no trend, but also fail when the trend is reversed. After a trend ends, there is usually a period of decline, but in the case of a sudden turn of the market, the decline may last for several months. During this time, the trend tracking strategy will make you lose money continuously.
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