How to cover positions in currency circle contracts

Contract cover-up refers to the trading behavior of making up for losses, including determining the direction of cover-up, calculating the quantity of cover-up, placing orders and closing positions. For example: If you hold 10 BTC contracts and suffer a loss of US$10,000, you can cover your position by going long 8.5 BTC contracts and close the position with a profit of US$10,000. However, covering positions is risky, so you need to operate with caution and close positions promptly to make profits.

Contract Cover-Up Operation Guide

What is Cover-up?

Contract cover-up refers to the trading behavior of buying or selling a certain number of contracts to make up for the loss when the contract position suffers a loss.

Contract position covering steps:

1. Determine the position covering direction: If the contract is in a loss state, you need to judge whether to add a long position or a short position based on the loss situation and market trends.
2. Calculate the margin quantity: The margin quantity needs to be calculated based on the current loss amount, contract value and margin ratio. Under normal circumstances, the amount of margin call should be greater than or equal to 50% of the loss amount.
3. Place an order: Place an order according to the calculated replenishment quantity and direction.
4. Close the position: When the contract price changes to the advantage of the investor, you can close the position and leave the market.

Example:

Suppose an investor holds 10 BTC contracts, the current price is $60,000, and the contract closing price is $61,000. When the BTC price fell to $59,000, the investor lost $10,000. At this time, investors can cover their positions to make up for losses.

1. Direction of covering position: Since the contract is in loss, it is necessary to cover the position and go long.
2. Calculate the amount of margin call: The current loss amount is US$10,000, the contract value is US$60,000, and the margin ratio is 20%. The quantity to cover the position needs to be greater than or equal to 10,000 / (60,000 * 0.2) = 8.33 pieces.
3. Place an order:Investors can place an order to buy 8.5 BTC contracts to cover their positions.
4. Closing: When the BTC price rebounds to $61,000, investors can close their positions and realize a profit of $10,000 to cover their positions.

Notes:

• There are certain risks in the cover-up operation. If the market trend is not in line with expectations, losses may be aggravated.
• The amount of margin call should not be too large, generally not exceeding 100% of the loss amount, to avoid excessive leverage.
• After covering the position, you need to pay attention to the market trend in time and close the position when it is profitable.

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