Contract Trading: Defense is the Bottom Line of Survival

In the world of contract trading, "not having a defense means losses" is a painful lesson learned by countless investors with their hard-earned money. Contract trading inherently carries leverage, which is like a double-edged sword; it can amplify profits but also multiply risks. Once the market trend diverges from expectations, without a defense mechanism, losses can spiral out of control like a runaway horse.

Imagine this: an investor confidently opens a long position at a high point, only to encounter a sudden black swan event in the market, causing prices to plummet. If no stop-loss is set, the losses will quickly accumulate over time; what was once a bearable loss could wipe out the entire principal in just a few minutes, even triggering a liquidation, resulting in total loss of capital. Even if the market might later experience a reversal, in the face of harsh reality, the account has already been zeroed out, and no significant reversal will matter to them anymore.

Among defense measures, stop-loss is the most fundamental and important line of defense. It is a predetermined loss threshold set based on one's risk tolerance and trading strategy. When the price reaches this point, the system automatically closes the position, locking in losses within a controllable range. It's like fastening a "seatbelt" for trading, protecting the investor's principal during severe market fluctuations. Traders who do not set stop-loss are like running naked in a storm; luck may bring temporary profits, but a single mistake is enough to destroy everything.

Moreover, taking profits is also an important part of defense. Timely locking in profits can prevent market volatility from turning realized gains into nothing. Contract trading is fraught with uncertainty; only by establishing effective defenses can one survive in this high-risk market and wait for genuine profit opportunities. Remember, you must first learn to protect yourself before you can talk about making sustained profits in contract trading.