Futures Trading Pitfall Guide for Beginners

Futures trading offers great opportunities but also carries significant risks. The following are the pitfalls that beginners are most likely to encounter:

1、Forgetting Contract Expiration and Forced Liquidation

On BiyaPay, physical delivery contracts will be forcibly closed by the system before expiration.

Avoidance Tip: Manually close positions a few days in advance to avoid unfavorable prices when the system forces liquidation.

2、Blindly Adding Leverage

Leverage can amplify profits, but it also amplifies losses.

Avoidance Tip: Beginners are advised to open positions with low leverage and sufficient margin to avoid being liquidated due to small fluctuations.

3、Not Setting Stop Loss and Persisting

Market volatility is high, and market conditions may reverse. Persisting with positions can easily lead to excessive losses.

Avoidance Tip: Set stop loss for every trade to lock in the maximum acceptable loss in advance.

4、Treating Futures as Spot for Long-term Holding

Futures are not spot; positions have time limits and must be closed after the expiration date.

Avoidance Tip: Use futures for trend or range trading, don’t think about long-term holding.

5、Ignoring Capital Management

Entering with heavy positions at once can easily lead to liquidation due to a single mistake.

Avoidance Tip: Control the proportion of single position size, enter positions in a dispersed manner, and maintain sufficient margin.

6、Not Paying Attention to Macro News

Futures prices are affected by policies, interest rates, and supply and demand. Beginners often ignore the big picture.

Avoidance Tip: Regularly follow macro news, Federal Reserve policies, and supply and demand situations of commodities.