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Chapter 25 Futures trading, small bets make a lot of money (2)
Futures investors with a gambling mentality always hope to make a fortune one day, eager to seize one or several futures stocks so that they can make a lot of money. Most of these people will end up bankrupt.The futures market is not a casino, you can't get angry, you must analyze risks and establish an investment plan.In particular, when people who behave in a fit of anger must first establish a ratio of investment funds when buying and selling futures.

Second, pick up the cheap and suffer a lot

In the futures market, many investors have this mentality of "dislike high prices and greedy low prices". They only want to buy some futures with small positions and small fluctuations, and do not consider buying futures contracts whose prices will fluctuate greatly. , Thinking that this kind of investment is too risky, as everyone knows, the relationship between risk and return is directly proportional.For example, wheat is cheap, but the sideways trading in He Nian for several consecutive months has made the futures held by many people who are greedy for low prices become loss-making commodities that will never be sold.

[-]. Hesitating and delaying the opportunity
Some investors have already made investment plans and strategies in advance, but when they step into the actual futures market, they are influenced by the external environment and hesitate to make decisions, so that they miss good opportunities.When investing in futures investment, one should not only pay attention to futures investment dynamics, but also pay close attention to local and international political and economic trends.Combine the estimation of the situation with the technical analysis of the futures price trend.Only in this way can we catch the buying or selling signal in time, and take the actual action of buying when it is time to buy and selling when it is time to sell.

[-]. Unnecessary panic

Affected by certain environmental factors and "road news", some futures investors lose confidence in futures investment or the future of certain contracts, and feel panicked, so they desperately sell the futures in their hands.As an investor, you should keep calm in the face of unfavorable news and carefully analyze the reliability of the news.If proven to be true.It also depends on whether the impact of such news is permanent or temporary. If it is the latter, there is no need to sell the futures in hand.

[-]. Indifference

After buying futures, just ignore it and let it develop naturally.Sometimes they even entrust their relatives, friends or brokers with full power to manipulate, and they seldom get involved.In the futures market, if you meet a responsible broker, you can still make some money by doing this, but if you meet someone who can only speculate in orders, the consequences will be unpredictable, and you may even lose all your money.Once you become a futures trader, you are a member of the futures market, and you should always pay attention to the dynamics of the futures market and care about your own positions.

A shrewd rich man often knows how to decide whether to enter the futures market and what investment strategy to adopt after evaluating the risks, returns and his own capabilities.

Risks in Futures Market and Its Prevention

When we enter the futures market for futures trading, it is necessary to further analyze the risk points in each operation link of futures trading in order to improve our own quality, standardize trading behavior, and minimize risks.

According to the different influences of risks, it can be divided into systematic risk and non-systematic risk; according to the controllability of risk, it can be divided into controllable risk and uncontrollable risk; according to the subject of risk, it can be divided into government management risk and exchange management risk. risk, futures brokerage company service risk and customer transaction risk.

Generally speaking, although the futures market is a "perfectly competitive" market, it is still unavoidable to be manipulated and controlled by some powerful big players, resulting in speculative price fluctuations.

The Hunter brothers, the American silver tycoon, unfortunately failed to speculate in silver in early 1980, which is a typical example.

At the beginning of 1979, the Hunter brothers began to buy silver in large quantities on the New York and Chicago exchanges at a price of $6 to $7 per ounce.By the end of the year, the Hunter Brothers had controlled 53% of the New York Mercantile Exchange's deposit silver and 69% of the Chicago Mercantile Exchange's deposit silver, with 12 billion ounces of spot and 05 billion ounces of futures.Under their control, the price of silver kept rising.

On January 1980, 1, the price of silver rose to US$17 per ounce. Stimulated by the gold market, the price of silver reached a historical peak of US$487 on January 1, an increase of more than eight times that of a year ago.This kind of crazy speculation has caused the market supply and demand of silver to be out of touch with the actual production and consumption, and the market price has seriously deviated from its value.At this time, in order to curb inflation, the U.S. government tightened monetary policy and raised interest rates sharply. Futures speculators withdrew one after another, causing the price of silver to plummet.By the end of March, falling to $21 an ounce, the silver market was on the brink of collapse.The Hunt brothers lost hundreds of millions of dollars in this speculative frenzy.

In addition, the purpose of speculators joining futures trading is to take advantage of the ups and downs of futures prices to profit. Therefore, when to buy and sell depends mainly on the judgment of futures price trends, that is, price expectations: buy when the price is expected to rise , sell when the price is expected to fall, and wait and see when the price is expected to consolidate.Speculators' price expectations are not only affected by various information on futures price changes (fundamental factor analysis), but also by their judgments on current and historical price trends (technical analysis).Therefore, under the stimulation of positive factors, people expect that the price will rise and buy one after another, thus driving up the price; and the trend information of the price increase further strengthens people's expectation of price rise, and people buy further, thus driving the price to rise further. rise.On the contrary, when the price falls, people expect the price to fall further and sell one after another, thus pushing the price to fall further.It can be seen that price expectations and speculative psychology in futures trading have a strong role in fueling and intensifying fluctuations in futures prices.

The unprecedented storm in the gold market in 1980 clearly reflected the influence of speculative psychology and price expectations on futures prices. In November 1979, the price of gold was only about US$11 per ounce, and on January 4, 1980, it soared to a historical peak of US$1.There are many reasons for its skyrocketing: economically, the Organization of the Petroleum Exporting Countries announced a substantial increase in oil prices; political factors, the Soviet Union invaded Afghanistan, Iran hijacked American hostages, the deterioration of US-Iranian relations, and the US freezing of Iranian assets in the US.The speculative psychology caused by some big gold merchants wantonly exaggerating and driving up the price of gold is an important reason for the skyrocketing price of gold.When the price of gold reached its peak, there were rumors that the U.S. government would auction off a large amount of gold deposits in January, which caused speculators to suddenly reverse their psychology and sell gold futures one after another. On January 21, the price of gold fell by 838 US dollars, and by March it fell to 1 US dollars.In addition to the influence of economic and political factors, speculative psychological factors also played a huge role in fueling the ups and downs of gold prices this time.By May, the turmoil in the gold market has basically subsided, people's hearts have turned bearish, and gold prices have weakened.Although there are some small factors that stimulate the rise of gold prices, they still fail to change people's psychological expectations and cannot promote the recovery of gold prices.Therefore, when predicting price movements, it is necessary to combine various factors to analyze the psychological expectations of most traders.

The operations and investment psychology of large investors listed above are some important factors affecting futures prices, but the actual influencing factors are much more complicated.In order to better predict futures price trends and grasp favorable trading opportunities, futures traders must pay attention to timely and extensive collection of accurate and detailed information on relevant factors; Quantitative analysis tools and technical analysis methods are combined for comprehensive application.

Compared with the spot market, various risks in the futures market have the characteristics of risk amplification, which is mainly reflected in the following five aspects:
(1) Commodities participating in futures trading are usually commodities with relatively frequent price fluctuations. Futures prices tend to resonate strongly with spot prices, which expands the risk surface and intensifies the risk degree.

(2) Futures trading has the characteristics of "fighting big with small things" and is highly speculative. Excessive speculative psychology of traders can easily induce risky behaviors and increase the possibility of risks.

(3) Futures trading is different from general spot trading. Futures trading is a continuous contract trading activity, and the risk is easy to extend and trigger a chain reaction.

(4) The volume of futures trading is large and risks are concentrated, resulting in large profits and losses.

(5) Futures trading has a long-term nature, and there are many uncertain factors in the future, making prediction difficult.

As an investor in the futures market, especially a novice who is new to the futures market, the most important thing to pay attention to is the following four aspects to prevent risks when trading futures:

(1) Strictly abide by all risk management systems of futures exchanges and futures brokerage companies.Violation of these systems will put investors in a very passive position.

(2) The funds and scale of investment must be justified and appropriate.If there is a problem with the funding channel, once it is tightened, it will inevitably affect the transaction; if the transaction scale is inappropriate, blindly placing orders or placing excessive orders will expose investors to huge risks beyond their own financial resources and capabilities.Remember, the futures market is a venture capital market, not a casino. Don't degrade yourself into a gambler.

(3) Have a good investment strategy.According to your own conditions (capital, time, health, etc.), cultivate a good psychological quality, constantly enrich yourself, and gradually form your own investment strategy.

(4) Pay attention to information, analyze the situation, and pay attention to every aspect of the futures market risk.The futures market is a place where news is flying all over the sky. It is necessary to gradually develop analytical skills and fully grasp valuable information.At the same time, always pay attention to changes in the market and improve the sensitivity of your own reactions.Remember, the market is always right.

Market risk is unpredictable, but it can be prevented through analysis.In this regard, investors have to do a lot of work, the most important thing is: when investing in the market, they must first start with the varieties they are familiar with, do a good job of basic work, start with fundamental analysis, supplemented by technical analysis.Don't go against the trend. You must set a "stop loss point" in the early stage, so as to avoid the loss from expanding and it is difficult to get out of the whole body.

In short, risks in the futures market exist objectively, but risks coexist with opportunities. While facing risks, opportunities also beckon to us.Success always favors the brave, and wisdom and bravery are the wings of investment success.

In the spot oil market full of competition and risk, there are neither generals nor soldiers who are often defeated.The key is to adopt flexible coping strategies as the futures market changes.

(End of this chapter)