Contract trading is a common trading method in the market. After the concept of rolling was introduced, contract trading has become an important means for investors to obtain profits.
Because it can help investors achieve higher flexibility and returns amid market fluctuations, it is gradually favored by more and more traders. However, contracts themselves carry the risk of liquidation.
Risks, and the probability of liquidation increases significantly when investors engage in rolling. However, many still choose to roll. So why do people still play contract rolling despite liquidation? From the analysis of the data, the main reason is the attraction of high returns. Below, Awen will explain in detail.
Why do people still play contract rolling despite liquidation?
The reason why people still play rolling operations despite liquidation is mainly due to the attraction of high risk and high return, dual market operation, psychological and emotional factors, and misconceptions about 'rolling liquidation.'
Explanation, insufficient market education, and platform guidance, etc. Contract rolling refers to investors continuously opening and closing positions in contract trading using their existing cryptocurrency assets.
A trading technique that hopes to gradually profit from market fluctuations.
The following is a specific analysis of the reasons:
1. The attraction of high risk and high returns:
Contract trading allows investors to leverage to amplify returns. For example, using 20x leverage, a price movement of only 5% can yield a 100% return. For some traders
For them, this potential for high returns is very attractive, even though the corresponding risks are also high. Contract trading has a short cycle, suitable for those who wish to obtain profits quickly.
2. The dual operation of the market:
Contract trading allows going long (bullish) and going short (bearish), and even in a bear market, profits can be made by predicting price declines. This flexibility attracts many who hope to profit from market volatility.
Traders who profit from market volatility.
3. Psychological and emotional factors:
Some traders view contract trading as 'gambling.' Even after experiencing rolling or liquidation, they still hope to recoup their losses next time. Even knowing the high risks of contract trading, they
Some traders may continue trading with the mindset of 'I can control the risk.' Some believe their technical analysis or market judgment abilities are strong enough to overcome the market.
The market.
4. Misunderstandings about 'rolling liquidation':
Many traders do not manage funds and stop-loss strategies properly when opening positions, leading to rolling or liquidation. High leverage brings high return expectations, but most traders ignore the same
The high risks that come with it.
5. Insufficient market education and platform guidance:
Some trading platforms attract users to participate in contract trading through high leverage, rewards, and other activities, while newcomers often lack sufficient risk awareness. Some traders
Entering the high-risk contract market without systematically learning risk management.
What does contract rolling mean?
Contract rolling refers to closing the contract of the current position when the contract is about to expire or is nearing expiration and immediately opening a new position in the same direction to maintain
Or adjust positions. This strategy is similar to 'day trading' in traditional financial markets. In the digital currency market, the high volatility and 24/7 trading
Characteristics, the frequency of rolling is higher, and the risks increase accordingly.
The core idea of rolling is to 'borrow strength to exert force, move with the trend,' that is, to turn market fluctuations into a source of profit. Rolling operations require investors to have strict risk management.
Risk control awareness and stop-loss discipline. The following are tips for contract rolling:
1. Accurately judge market trends
Investors need to use various means, such as technical analysis and fundamental analysis, to predict market trends. In an uptrend, investors can choose to go long; in a downtrend
In a downtrend, one can choose to go short.
2. Position control
Investors should reasonably control their positions based on their risk tolerance and market volatility. Generally, light positions can reduce risks, though they may miss good
Heavy positions may bring higher returns, but the risks also increase accordingly. Investors need to find a balance between risk and reward.
3. Take profit and stop loss
Investors should set take profit and stop loss points in advance. Once the market trend touches these points, they should immediately execute closing operations. Taking profit can help investors lock in profits.
Profits, to prevent greed from causing profit withdrawal; stop-loss can limit investors' loss range, avoiding unbearable losses due to excessive market fluctuations.
4. The ability to flexibly adjust strategies
The market is constantly changing, and investors should adjust their operating strategies in a timely manner based on changes in market trends. For example, in an uptrend, if the market shows signs of a pullback,
In a rising trend, investors can choose to reduce positions or close positions; in a downtrend, if there are signs of a market rebound, they may consider increasing positions or continuing to go short.
5. Leverage operations
Through the leverage effect, investors can use less capital to leverage larger trading volumes and amplify profits. Leverage is also a double-edged sword, as it can amplify both profits and losses.
Losses. Investors should be cautious when using leverage to avoid risks from excessive leverage.
Is contract rolling in the cryptocurrency circle safe?
Contract rolling in the cryptocurrency circle is not safe. The risks of contract rolling mainly stem from the amplification effect of leveraged trading. Through leveraged trading, investors can borrow funds for trading.
This can amplify profits or losses. However, leveraged trading also increases the investor's risk exposure. Once the market experiences severe fluctuations, it can easily trigger rolling risks.
For example, an investor purchases Bitcoin through leveraged trading, but when the price of Bitcoin suddenly drops beyond the set warning line, the exchange will quickly close their position.
Inch, leading to the occurrence of rolling events.
In addition to the rolling risks brought by leveraged trading, manipulation in the cryptocurrency market and market emotions can also affect the occurrence of rolling.
The market price, enticing investors to blindly follow the trend. Once the market trend reverses, it can trigger a chain reaction, leading to the emergence of rolling. Additionally, fluctuations in market sentiment can also
Intensify the risk of rolling. Investor emotions fluctuate greatly, and panic spreads, making it easy to make wrong decisions, exacerbating the occurrence of rolling events.
In response to the risks of contract rolling in the cryptocurrency circle, investors can adopt a series of effective risk management strategies. First, strictly control the leverage ratio, avoiding greed for high returns.
Avoid the risks brought by excessive leveraged trading. Secondly, establish a strict stop-loss mechanism, set reasonable stop-loss points, and promptly stop losses and close positions to avoid further losses.
Furthermore, regularly following market dynamics and maintaining rational thinking can prevent being swayed by market emotions and make wise investment decisions.
Specific techniques for contract rolling operations
1. Accurately judge market trends
Investors need to use various means, such as technical analysis and fundamental analysis, to predict market trends. In an uptrend, investors can choose to go long; in a downtrend
In a downtrend, one can choose to go short.
2. Position control
Investors should reasonably control their positions based on their risk tolerance and market volatility. Generally, light positions can reduce risks, though they may miss good
Heavy positions may bring higher returns, but the risks also increase accordingly. Investors need to find a balance between risk and reward.
3. Take profit and stop loss
Investors should set take profit and stop loss points in advance. Once the market trend touches these points, they should immediately execute closing operations. Taking profit can help investors lock in profits.
Profits, to prevent greed from causing profit withdrawal; stop-loss can limit investors' loss range, avoiding unbearable losses due to excessive market fluctuations.
4. The ability to flexibly adjust strategies
The market is constantly changing, and investors should adjust their operating strategies in a timely manner based on changes in market trends. For example, in an uptrend, if the market shows signs of a pullback,
In a rising trend, investors can choose to reduce positions or close positions; in a downtrend, if there are signs of a market rebound, they may consider increasing positions or continuing to go short.
5. Leverage operations
Through the leverage effect, investors can use less capital to leverage larger trading volumes and amplify profits. Leverage is also a double-edged sword, as it can amplify both profits and losses.
Losses. Investors should be cautious when using leverage to avoid risks from excessive leverage.
Precautions for rolling operations
Rolling operations have high risks, and investors should always prioritize risk control, strictly adhering to stop-loss discipline to avoid making wrong decisions due to greed or fear.
Make wrong decisions.
Investors should strengthen their research and analysis abilities regarding the market, improving the accuracy of their predictions regarding market trends. Only by deeply understanding the market can they make wiser investment decisions.
Strategies.
Rolling operations require investors to have good mindset management abilities. In the face of market fluctuations, one must remain calm and rational, avoiding impulsive decisions due to emotional fluctuations.
The above content answers the question of why people still play contract rolling despite liquidation. The attraction of contract trading lies in its high profit potential and dual operation.
The flexibility of operations and the possibility of quick profits. Despite the high risks of rolling and liquidation, many are still willing to participate because they believe they can gain through experience, technology, and fund management.
Control risks and achieve profitability. Awen reminds everyone that rolling operations have high risks, and investors should always prioritize risk control, strictly following stop-loss discipline during operations.
Strictly adhere to stop-loss discipline to avoid making wrong decisions due to greed or fear.
