In gold trading , lock-up generally refers to locking the profit and loss of the transaction. In the fluctuations of the gold market, gold investors do not want to suspend the transaction and carry out a two-way operation transaction in order to preserve the existing profit or avoid the expansion of losses. That is, the spot gold pair holds two equal positions of buying long and short selling at the same time.
Spot gold lock-up is generally divided into two ways, namely profit lock-up and loss lock-up.
Profit lock-up means that the spot gold that investors buy and sell has a certain degree of floating profit. Investors feel that the original general trend has not changed, but the market may drop or rebound for a short time, and investors do not want to place the original low-priced buy order or high-priced sell order. To close a position easily, open a new position in the opposite direction while continuing to hold the original position.
Loss lock-up means that the spot gold that investors buy and sell has a certain degree of floating loss. Investors cannot see the future market clearly, but do not want to turn the floating loss into an actual loss, so they continue to hold the original loss position and open in the opposite direction. Open new positions in an attempt to lock in risks.
There are generally four reasons for spot gold lock-up:
- After the transaction, it is impossible to judge the future development of the market, and lock the position to obtain the time buffer effect of research and judgment;
- Trading mistakes but making judgments about market conditions and hoping to obtain corrective actions;
- The transaction is correct but has a judgment on the market situation and hopes to obtain more profits;
- It is a kind of self-deception and self-comforting behavior of people who have no opinion on the market and are unwilling to stop the loss and have illusions after a loss. Most of the gold prices are locked in this type.