Long-term traders need to have the ability to manage capital. I hope these key experiences will be helpful to you!

1. Risk Plan.

Capital Risk Plan:

Before trading, take a look at how much capital you have. How much risk are you willing to take with each trade? This needs to be planned in advance. The proportion of risk generally depends on your capital and your ability to earn off-market. For example, if your invested capital is 50,000 and your off-market income is 10,000 per month, then the monthly risk plan should not exceed 2,000, which is less than 20% of your off-market income and 4% of your total capital. This way, you can ensure that in cases of particularly bad luck or continuous wrong trades, the losses in your account won't affect future operations. For professional traders, the risk for each trade is controlled within 2%, and monthly trading losses should not exceed 10%. If it does, force yourself to take a break and think carefully about that month's operations.

Psychological Risk Plan:

Trading is a mechanical action, but humans are emotional beings. Therefore, I believe that the risk plan regarding psychological endurance is the most important. If you have 50,000 in the market and a stop loss of 2,000 is not acceptable for you, then you need to create a plan that suits your psychological endurance.

2. The risk-reward ratio in trading is a probability of profit and loss. Each trade's entry and exit, stop loss, and take profit all require a suitable plan, which is essential for trading.

Here’s an example: Yesterday, I told my friends to go long on BTC based on the breakout at 25,700, with a stop loss at 25,400 and a first target for take profit at 26,400. The risk-reward ratio is 1:3, and here we reduce our position with a second target around 28,000, with a risk-reward ratio of 1:5. Take out the capital that can withstand the stop loss of 25,400 to make this plan.

3. Trend and Take Profit Targets. Why are take profit targets and trends part of risk management? Trading is not a guaranteed winning signal; strictly executing the take profit plan is the core of your stable profits. Trends always emerge from smaller timeframes. Some people may ask why your trades can hold so well; different cycles have different targets. Trades that emerge from small cycles into larger trends are gradually reduced in position, allowing profits to run. I can definitely hold on to them. The take profit targets of 1:2 and 1:3 are also based on reducing positions. When you cannot see the target, reduce your position proportionally, which may just mean earning a little less. After all, market perceptions vary from person to person.

4. Subtraction in trading. When you achieve a certain profit in the market, appropriately withdrawing your principal is never a mistake. There are many opportunities in the market, and staying alive gives you the hope of becoming wealthy.#风险管理 $BTC