In contract trading, it is indeed crucial not to hold onto losing positions, as this can lead to numerous serious risks:

Increased Losses

• Contract trading inherently involves leverage, and adverse price fluctuations can be magnified. If you hold onto a losing position, as the market continues to move against you, losses can increase rapidly, potentially far exceeding the initial capital, resulting in significant financial losses.

Risk of Liquidation

• When losses reach a certain extent and the account's margin is insufficient to maintain the position, it will face liquidation. Liquidation means that the investor will not only lose all invested funds but may also owe money to the platform due to leverage, putting the investor in serious financial trouble.

Imbalanced Mindset

• During the process of holding onto a losing position, investors often endure immense psychological pressure. As losses grow, it is easy to experience anxiety, fear, anger, and other emotions, which can affect subsequent trading decisions. This may lead investors to take more aggressive trading strategies in a blind attempt to recover losses, creating a vicious cycle.

Missed Opportunities

• Funds trapped in losing positions may miss out on other more promising trading opportunities. The market changes rapidly, and when investors are busy coping with the difficulties of holding onto losing positions, they may miss other clear directional trades with higher profit probabilities, affecting overall investment returns.

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