Coinnice Communication Class: Have you ever had a margin call?

Contract trading is ever-changing, and it is a test of the human nature of investors. Choosing the right time to enter the market and mastering scientific operating skills requires patience and not impatience; contract trading is full of challenges and excitement. Strong winds reveal strong grass, and fierce fires reveal true gold. In the process of trying and investing, our minds, vision, and courage will be better sublimated .

New traders are most likely to suffer losses due to margin calls . On the one hand , they do not know much about the market when they enter it. They are unwilling to spend time observing the market and take risks with their money or blindly follow orders. On the other hand , they are eager for quick success and use a large proportion of leverage and heavy positions . They do not use the stop loss function properly and have a low risk resistance, so margin calls are more likely to occur .

Liquidation is also an indispensable part of contract trading. Don't be shocked. Treat it with a normal mind. Think calmly and learn from experience. Facing gains and losses, staying calm is the most basic mentality that contract traders must have.

A margin call in contract trading actually occurs when a user suffers a loss and the total margin in the account is 0. In layman's terms, a margin call occurs when all the money is lost. A margin call means that all the user's opened positions are forcibly closed.

In fact, the proportion of margin calls in contract trading is quite high . If a user looks at each position one by one, there is a 50 % probability of margin call for each position . When a margin call occurs, many users suffer serious losses or even lose all their assets because they invest too heavy positions, without realizing that margin call is part of contract trading. The reason why margin calls often occur is that there are always two directions in the market , and one direction is correct and the other is wrong .

Therefore, one of the important operational strategies for contract trading is how to prevent liquidation .

1. The main means of control is to stop losses in time

If you set a compensation range for yourself when you enter the market , set a stop loss point, and place a limit price order in advance; if you are long, surrender when the support point is broken; if you are short, exit the market when the resistance line is broken. When you suffer a loss, you must act decisively to reduce the loss. "Don't be afraid of regret, but be most afraid of delay" is the most important principle of stop loss.

Many people’s positions were liquidated because they did not set stop losses. The reason may be that they were hoping for luck and to get rich overnight, hoping that the price would be consistent with the direction of their opening positions. However, if they want to make stable profits, they still have to rely on their own strength and operating skills. The Bitcoin market has its own operating rules and will not be affected by personal will, so investors must not rely on luck.

The correct strategy to deal with it is to strictly set a stop loss line or continuously reduce positions when the market reverses. This can ensure profits while staying away from margin calls . If users have a deeper understanding, they can also make more complex opening and closing positions in strategy trading and build some small models to deal with different price changes . If the trend judgment in the long and short directions is dispersed enough, the accuracy or error rate will be reduced by 50 % . Therefore, for users of investment contract transactions, if no stop loss is set, the probability of margin calls will be reduced to 50 % . Reasonable and clever use of the stop loss function will greatly reduce the probability of margin calls.

Of course, the scale of stop loss should be reasonably combined according to your own operation cycle and other factors. According to your own operation cycle, you can appropriately reduce or enlarge the stop loss . For example: for medium and long-term operations, the stop loss can be slightly enlarged , and for short-term operations , it can be reduced .

In order to obtain better profits, everyone will continue to add positions when profits are realized. When prices reverse, especially when the recent fluctuations are more drastic , a reversal fluctuation often exceeds 5 %, which can easily trigger the position order in the position- by-position mode .

( 2 ) The way to avoid a margin call is to hold a small position and make steady progress.

It is quite common to get a margin call due to heavy positions. For example, if the holding ratio reaches more than 90%, there will be less unoccupied funds, and less room to resist reverse changes. If there is a reverse change, the additional margin will be insufficient, and you will get a margin call . Some people get a margin call due to heavy positions, but some people get a margin call due to light positions. The reason may be frequent entry and exit, excessive trading, and psychological analysis may be due to casual orders, emotional dominance, and the psychological anxiety of being eager to make a profit .

Our advice to everyone here is that if you frequently encounter margin calls, you can stop to think , calm down, and adjust your operating methods and techniques .

3. What you put in your pocket is yours (reject greed )

In daily trading, the most frustrating thing is that you originally made the right decision and even had considerable floating profits, but then the market reversed and the cooked duck flew away. You should have made money but now you have to close your position at a loss. This situation has the greatest psychological impact on small people. Small people buy and sell futures to make money, and what they put in their pockets is theirs. Therefore, the way to reduce the risk of liquidation is to refuse greed .

4. The size of the risk is up to you      

Why do many people dare not touch contract trading , and even feel scared when it is mentioned? The main reason is that it is risky and easy to blow up . Is it possible to pursue high profits while avoiding the frequent occurrence of high-risk blow-ups ? The answer is of course yes! Everything has risks. Rising and falling, profit and loss are two contradictory sides, and the two are opposite and unified . The size of the risk of blow-up in contract trading depends entirely on one's own control over the operation.

During the operation , we must be very confident in ourselves and not blindly follow the market analysis as a reference for transactions. Due to the uncertainty of the market, no one can stably predict every important turning point or market fluctuation, so we must be a rational , calm investor who does not blindly follow the trend.

Coinnice digital currency trading platform:

Coinnice is about to launch a smart contract system to help users control risks and grasp profits . For different price change systems, there are multiple models to support and grasp the market, and to handle corresponding operations more optimally and timely. Strategy trading is a way to prevent liquidation . Intelligent models can reduce risks. Users only need to judge the trend and target price, and they can sit back and wait for the fruits of victory .