Why is it easy to burst?
Burst positions only occur in margin.
Trade bust?
When your margin available is 0, you cannot trade without the margin available.
A burst position means that the loss is greater than the funds available in your account after the margin is deducted.
A burst position is a situation in which a customer’s equity in an investor’s margin account is negative under certain special circumstances.
When the market situation changes significantly, if most of the funds in the margin account of investors are occupied by trading margin, and the trading direction is contrary to the market trend, it is easy to burst the position due to the leverage effect of margin trading.
If a bust results in a shortfall and it is caused by an investor, the investor needs to make up the shortfall or face legal action.
The position explosion is mainly related to improper money management.
In order to avoid the occurrence of this situation, need to hold the amount of special control, reasonable management of funds, avoid the stock trading may appear in the full position operation;
And foreign exchange trading is different from stock trading, investors must keep track of the stock index futures market.
Therefore, stock index futures are not suitable for all investors.
So why are foreign-exchange positions prone to collapse?
Mainly in the following three aspects.
1, leverage – “to small broad” temptation people like to use leverage, some people use 500:1 leverage, some people use 400:1 leverage.
Even 100:1 leverage is often used.
I rarely use less than 100:1 leverage in forex trading because I’m used to it.
Precisely because of the use of leverage, trading is actually magnified many times over, making it harder to make a profit but easier to lose.
2, long and short – the temptation of “two-way profit” ordinary people see “long and short two-way trading, two-way profit” immediately become very naive.
The normal first reaction is: whether the market trend is up or down, I can make a profit because I can buy or sell.
I can go with the flow.
If the price goes up, I’ll buy more, if the price goes down, I’ll sell short.
However, this is not the case, even the opposite.
If you judge the wrong direction, when you buy too much, you will also make mistakes when you sell short.
This is a two-way loss and acceleration loss.
3. Instant Buying and Selling — Accelerated burst literally means real-time trading: you can build and equalize positions every second if you want.
You can hold each trade for a second and close out the position, or you can complete a trade in less than a minute.
You can build a warehouse and a warehouse whenever you want.
Few people who trade currencies can go several years without bursting their positions.
The above three points are the advantages of brokers to attract you to foreign exchange.
They are, of course, the advantages of foreign exchange, but you see where you stand and how you take advantage of them.
They are like a sharp knife.
Used correctly, they are your tools.
If used incorrectly, they can send you on your way.
As traders, we must make our own trading strategy according to our trading principles, trade according to the plan, give up naivety, think more, so as to obtain more profits and go further on the road of trading.
The dollar rose to a one-week high and gold fell below 1,770 ahead of the Fed rate decision.
Please pay attention to the specific operation, the market is changing rapidly, investment needs to be cautious, the operation strategy is for reference only.
