Futures Trading: How should futures traders value their risk tolerance?
Futures trading is a highly risky investment behavior, and it is even more so for speculation. Therefore, it is particularly appropriate for Wang to assess its own risk tolerance to determine whether futures trading will be done or how to do it. important. "Think twice before doing it." Once you start your futures trading, you can increase your chances of making profits and reducing losses.
Any speculator or futures trader is reluctant to lose money, but there are opportunities for profit when there is risk, and the risk is that there is a chance of a deficit, so the so-called "unwillingness to cover up the children can not cover children wolf." Therefore, considering the nature and size of a person's risk is the key to determining the customer's suitability for futures trading. It is also the focus of developing a proper financial management plan. A person’s financial status such as net asset value and current assets determines the size of his/her risk, and decides his financial compliance with futures transactions.
Net asset value is the net value of the total value of assets after deducting negative anger. This part can be used as a criterion of how much risk can be avoided. A person’s high net asset value of course means that he can afford greater risk; on the contrary, low net asset value means The risk he can afford is also small. However, the part of a person's assets that can actually be used to engage in futures trading is its current assets. Of course, the current assets X must be used to meet the needs of living. Therefore, only the excess liquidity needed to support daily life can be used to invest in the futures market. As for how much of the excess liquidity can be used for futures trading, it depends on many circumstances. For example, the trader's age, family size, type of occupation and its stability, family's attitude towards the transaction, their own emotions, and their desire to take risks will all influence the trader's attitude towards the transaction.
Foreign experience sources pointed out that those with a net asset value of less than 50,000 U.S. dollars are not suitable for futures trading. This is a daunting task for the vast majority of our residents. However, we must pay attention to the fact that the number of international futures contracts is very large, and too little money cannot be done. With the further development of the futures market, I believe there will be more individuals involved in small-capital traders.
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