The Importance of Stop Loss.

In contract trading, it is essential to set a stop loss because the stop loss is the lifeline of your trading. The same applies to spot trading; you should still set a stop loss when the price reaches your desired level. For spot trading, the stop loss can be set at 20%-25%, which can maximize the protection of your principal.

Taking BTC as an example in contracts.

First, if you do not look at the market and only rely on your gut feeling and trading experience, where would you set your stop loss?

Most people would set their first stop loss at 103500.

The second option would be to set it at 104000.

The third option would be to set it at 104580.

Let's talk about the first option. If you set it at 103500, your stop loss is very likely to be executed due to slippage, leading to liquidation.

For the second option, setting it at 104000, although this is a round number, most people who don’t analyze the market or cannot see support and resistance would place it here, thinking it is a relatively safe place, but in reality, strong players will also choose round numbers.

For the third option, 104580, I would choose to place it here because there is slight resistance at 103880, resistance at 14300, and resistance at 14500, to avoid slippage, I add 80 points to my stop loss; this is due to my usual trading habits.

Contracts inherently have a gambling component, so if you use low leverage, you won’t make much money and might even lose everything.

Start by judging from your personal character. If you are someone who takes a little profit and runs, or if you can’t bear a small loss, you need to assess. You do not have a grasp on balance; contracts are a form of trading where you can risk a small amount for a large return. You might as well use high leverage, opening a position with 10% of your capital, set a good stop loss, and wait patiently.

Taking 1000U as an example, suppose you short at 102800 with a 10% position, which is 100u margin, or 0.1 Bitcoin, with your stop loss set at 104580, your leverage would be 95%. If it hits your stop loss, you would lose 165%, amounting to a loss of 178u. First, consider whether you can accept this level of loss.

If your take profit is set at 98580, your profit would be 435U.

Of course, not every trade will move directly in the direction you believe it will go. But you must have a goal and a plan.

Even if you cannot analyze the market, that's not a problem.

After a stop loss, do not enter immediately; wait patiently for a bit, and then enter at the next level. For example, if you hit a stop loss at 104850, you can wait to enter at 106320. The primary thing is to set a good stop loss, find support and resistance levels, and plan the amount of loss you can afford.