What are the risks of liquidation in perpetual contracts?
1. Pin-in behavior: This is very common. It exists in major exchanges. It is said to be caused by technical problems, but it is often speculated that it is difficult to judge whether it is the behavior of the exchange itself.
2. Uncontrolled and continuous increase in positions: When placing an order for a perpetual contract for the first time, everyone generally has a clear understanding of the liquidation price position after placing an order, but many people see the liquidation position of the first order and have not considered the liquidation position after their own increase in positions. Therefore, there are many liquidations in this scenario.
3. Distorted mentality of return: After the perpetual contract loses money, many people will have serious problems with their mentality. 👀 Near q1un + Wei: L20240098, suppose you lose 100U, then you may want to return the money immediately, so you impulsively place an order again, resulting in a loss of 200U, and then continue to lose your mentality, resulting in a loss of 400U. If this continues, you may not blow up your position many times. You are lucky enough, because like gambling, there is always one guess right in 10 times, so in most cases you will not blow up your position, but once you blow up your position, you will lose a very large amount of money, resulting in all your previous efforts being wasted.
4. Explosion in stable market: There is a principle of the contract that you should not hold the order for too long. The perpetual contract is not a financial product for long-term investment. It is a financial derivative. Therefore, it is best not to hold it for more than 3 days, unless you have made a profit. Therefore, do not exceed 3 days. If you exceed it and you are still closing your position or losing money, it is recommended that you close your position as soon as possible and then find an opportunity to make up for it.
5. Chasing shorts or longs: In a continuous decline or rise, if there is a sudden drop or rise in volume, many people will chase shorts or longs. For example, if the 15-minute/30-minute/1-hour K-line or RSI is falling, and then there is a sudden drop in volume, many people may chase shorts, resulting in a large-volume rise in this wave and a liquidation.
