What is the meaning of lock order in futures market？ What are the risks of this operation？

In the futures market, lock orders are a special trading operation.Lock order refers to that investors hold long positions in a futures contract and short positions in the same contract at the same time. To put it simply, it is to buy and sell the same futures product in the opposite direction and in the same amount at the same time.

For example, investors hold 10 long positions in a futures contract, fearing that the price drop will cause losses, so they open 10 short positions in the same contract, which is the lock-up operation.

So, what are the risks of locking orders?

First of all, locking orders will take up more margin. Due to holding both long and short positions, the demand for margin will increase accordingly, which may limit the efficiency of investors’ use of funds.

Secondly, locking orders cannot completely eliminate risks. Although the profit and loss of long and short positions may offset each other when the price fluctuates, if the market trend continues to develop in an unfavorable direction, the losses of positions may continue to accumulate.

Moreover, lock orders are easy for investors to fall into decision-making difficulties. When the market situation changes and needs to be unlocked, it is often difficult for investors to accurately judge when and how to unlock, and the wrong unlocking decision may lead to greater losses.

In addition, locking orders may make investors ignore the correct judgment and analysis of market trends. Because they think they have locked in the risk, they relax their attention and research on the market and miss better trading opportunities.

Here is a table to compare some features of lock orders and normal positions more intuitively:

Comparison project Lock order Normal position Margin occupation higher Relatively low risk control Seemingly locked, but actually complicated. Rely on strategies such as stop loss Decision difficulty High, it is difficult to grasp the timing of unlocking Relatively simple, making decisions according to trends. Attention to the market May decrease Need continuous attention

In short, the lock-in operation in the futures market is not a simple and effective means of risk management. Investors should fully understand its potential risks and make decisions cautiously when considering the use of lock-in strategy.

(Editor: Guo Jiandong)

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