What are the big risks of futures investment?

Haidu Investment Development Co., Ltd. reminds you that the more risks mentioned in futures investment are high leverage and forced liquidation. What are they?

High leverage risk

Futures trading uses margin trading instead of full trading. Therefore, leverage is produced. The leverage ratio is about 10 times. In other words, in the futures market, 1 million yuan of commodities can be traded for 100,000 yuan. This leverage is indeed not low, but no experts dare to say that high leverage will definitely generate high risks. Leverage actually only affects the amount of margin, the real risk comes from the position (the size of the position) and the wrong judgment of the price trend. High leverage and high risk cannot be directly equated.

Forced liquidation risk

The so-called forced liquidation refers to the forced liquidation of a position by a third person (future exchange or futures company) of the position holder. In futures trading, there are many reasons for compulsory liquidation. A common one is forced liquidation due to insufficient trading margin of the customer, that is to say, when the margin required by the customer to hold the position is insufficient, and the futures company's notification does not promptly call the margin or voluntary lightning position behavior is a futures company forced liquidation Drop some or all of the customer's positions to avoid increased losses. From the above definition, it is not difficult to see that the forced liquidation occurs because the customer holds insufficient margin, and the reason for the insufficient margin is nothing more than the client's heavy or full position operation.

Forced liquidation is only a means for exchanges or futures companies to control risks. When the market is unfavorable to customers, forced liquidation can even avoid further expansion of customer losses.

Assuming that there is no compulsory liquidation system and customers do not reduce their positions, the customers' full positions of 600,000 yuan will be lost. On the contrary, under the risk of forced liquidation, if the position is reduced during the down period, the customer's loss will be greatly reduced. It can be seen that forced liquidation is conducive to risk control. This is not the root cause of the high risk of futures trading. The real risk comes from misjudgment of market trends and heavy trading.

High leverage and forced liquidation are just scapegoats for the "high risk" of futures, and heavy trading is the big risk of futures investment.