Why is foreign exchange easy to lead to position explosion?

Foreign exchange knowledge/

Foreign exchange investment needs to keep calm all the time. If you don't know yourself and the market clearly enough, you can only trade rashly. As a result, you will suffer losses. Today, let's talk about why foreign exchange investment can easily burst.

Burst is when your available margin is 0, you can't trade without it. Foreign exchange trading burst is a loss greater than your account after the removal of margin available funds. After the company is forced to level, the remaining capital is the total capital minus your loss, and generally there is still a part left.

Position explosion in foreign exchange trading refers to the situation that the client's equity in the margin account of investors is negative under some special conditions. When the market changes greatly, if the margin of investors is occupied by the trading margin, and the trading direction is opposite to the market trend, it is easy to burst due to the leverage effect of margin trading.

If the burst leads to a deficit and is caused by investors, investors need to make up the deficit, otherwise they will face legal recourse.

Most of the burst is related to improper fund management. In order to avoid this situation, we need to control the position, manage the fund reasonably, and avoid the full position operation in the stock trading. Moreover, foreign exchange is different from stock trading, so investors must track the stock index futures market in time. Therefore, stock index futures are not suitable for all investors.

Before foreign exchange trading, you need to spend some time seriously to understand the market and yourself, and wait until you have a good plan in mind. Too much panic will only expose your disadvantages more and more.

[disclaimer] the publication of this article by finance managers for the purpose of transmitting more information does not mean that they agree with their views or confirm their descriptions. The content of this article is for reference only, and does not constitute an investment proposal. Investors operate on this basis at their own risk

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