Is the spot risk big?

The risks in the spot market are various, and the risk closest to investors is the risk of transaction loss. There are three main factors that lead to the risk of spot trading, namely, going against the market, heavy positions and dead covers. For investors who switch from the securities market to the spot market, it is typical to hold stocks in heavy positions. Because of this, it is necessary to know and understand the risks of spot trading and the methods to control them.

1. Risk of misjudging the market prospect

An important feature of spot trading different from stock trading is that there is a short-selling mechanism in the spot, that is, no matter whether the spot rises or falls, there is a chance to make a profit, provided that we judge the market outlook accurately. The market outlook here can be minutes, hours, days or weeks after entering the market, and the result of misjudgment is the loss of funds. The occurrence of such risks is mainly due to investors' misjudgment of the trend. Under normal circumstances, investors who have no conditions for in-depth analysis of fundamentals should master the application of indicators to judge trends, mainly the application of the moving average system. According to the moving average system, there will be no big loss.

2. Risk of wrong admission time

The so-called risk of wrong timing means that investors may lose money when they enter the market because of wrong timing, even if they judge the late megatrend accurately, which will have a negative impact on operational psychology. The last time to enter the market is not the highest and lowest point on the market chart, because it is difficult to guarantee that every operation will enter the market at the top and bottom, but only once at the top and bottom. In other words, in a bull market, you have only one chance to short for a long time, and the chance of success is n times. Investors should wait patiently for the top and bottom signals or patterns on the chart to appear.

3. Risk of overweight positions

The margin system of spot trading determines that the profit and loss of spot trading is effectively enlarged. If you use 20% of the funds to buy a commodity spot contract with a value of 100%, the profit and loss may far exceed the deposit in your account before opening the position. This is the risk and charm of spot trading. The risk of adding positions is quite harmful to investors in the early stage of opening positions. When you judge that the market is rising, don't intervene heavily. You can intervene to hold small orders to prevent the final suppression from hurting confidence.

4. Risk of holding an overnight position

The short-term spot price of commodities fluctuates sharply and the price continuity is poor, so it is often possible for prices to jump high or low. If the price of your position moves in a direction that is not conducive to your position after overnight, it will cause you a big floating loss at the moment of opening, but at this time your psychology is quite fragile, because the high and low points of the day are often formed within 30 minutes after watching the market, and during this period, both long and short sides have great differences and fluctuations on the direction of the day. If you hold a loss-making position, but when you close the position, you may be at the highest or lowest point within 30 minutes of opening the position. After 30 minutes, the trend of the intraday trend came out, and you dare not chase it because you have just been washed out.

5. Risks caused by accidents

Sudden international and domestic political and economic crises, exchange rate changes, terrorist attacks, abnormal weather changes, etc. will all cause drastic fluctuations in commodity spot in a short time. The overnight risk of stock index futures is relatively small, because the linkage between stock markets in various countries is less than that between commodity futures in various countries, because spot goods have opportunities for cross-market arbitrage, and there are few such arbitrage opportunities between stock markets in various countries.