Contract trading: a double-edged sword with high risk and high return
Contract trading is like a double-edged sword, which can quickly accumulate wealth, but it can also quickly swallow up funds. Its high risk is mainly reflected in:
1. Both long and short positions may be liquidated: When the market fluctuates violently, whether it rises or falls, contract investors may be liquidated because they cannot withstand extreme fluctuations. This means that even if the general direction is right, they may suffer heavy losses due to fluctuations in the short term.
2. The market is unpredictable: Contract trading requires investors to be extremely sensitive to the market, because the market is often unexpected, and even a unilateral trend may be accompanied by a large number of callbacks, making traders tread on thin ice.
3. The two-sided nature of leverage: Although leverage can magnify profits, it also accelerates losses. Once the market trend is contrary to expectations, investors may quickly face the risk of liquidation, which increases the gambling nature of the transaction.
Contract trading should be treated with caution. For most investors, choosing high-quality assets, holding spot and waiting for the right time to sell is a more secure strategy that can bring stable returns.
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