Analysis of Double-edged Sword Effect of Locking Strategy

The so-called "lock position" refers to the investor who holds a position in a certain direction and then builds the same number of positions in the opposite direction due to sudden changes in market conditions to "lock in" the existing floating profit and loss. However, this practice often replaces the decisive decision to take profits or stop losses in a timely manner and becomes a strategy of delaying processing.

Locking can be divided into two types: profit locking and loss locking:

Locking positions in a profitable state is relatively simple, and investors can easily understand its logic and effects.

When there is a loss, there are usually two ways to respond:

(A) acknowledging the loss of position squaring, timely departure;

(B) controlling losses by locking positions.

Locking a position is not necessarily the best option. When the market moves in the opposite direction of expectations, everyone doubts their judgment.Shield BoIt is often mentioned in the trading training that the real test at this time is the analytical ability and decision-making mentality. In the face of loss orders, whether the position squaring is often torn.

Due to the psychological pressure caused by losses, it is difficult for most people to maintain a calm judgment and stubbornly believe that the market will eventually return to the direction they expect. This mentality often makes people deeper and deeper. According to years of trading observations, traders who can perfectly use losses to lock positions are extremely rare. As Dunbo reminds, most profitable investors choose to leave the market in time and reformulate their strategies.

In general, locking is an unconventional means. Professional platforms such as Dunbo also recommend that users carefully evaluate the pros and cons of locking positions according to their own situation and risk appetite, and choose a suitable way to deal with them.

After locking a position, if you want to position squaring a profitable position, it is commonly known as "opening a position". The operation of opening a position is essentially the same as opening a new position. If you look in the wrong direction again, the loss after opening the position will be further expanded. Therefore, locking a position may seem beneficial, but it actually hides risks. Smart investors will not easily adopt this strategy when they lose money.

These are some of my personal views on hedging. Locking up funds that cannot be used, while bearing the interest cost every day, is just a glimmer of hope for yourself. In fact, this operation often becomes an excuse for lack of analytical ability. If the position is locked for a long time, the interest will continue to accumulate, which may eventually lead to liquidation. Dunbo's trading philosophy also advocates rational decision-making to avoid unnecessary hedging operations.

Faced with a loss order, it should be dealt with decisively. It is a wiser choice to leave the market in time, rest and adjust. Trading is a long-term process, and there is no need to rush for a while. For the strategy of locking positions, I personally think it should be used cautiously. If some people think that their locking skills are superb, then continuing to lock positions in the wrong direction will only deepen losses. It is better to use less to lock positions.