The financial market is like a battlefield; each trade is like a war. To win the war, you need a clear tactical layout and flexible response strategies. The two core elements of investment trading are unity and the use of leverage.
Today, we will use simple and understandable language, along with real cases, to explain these two points thoroughly.
"Unity": Manage positions like the Art of War.
The Art of War states: "Those who share the same desire from top to bottom will win." This means the army must be united; when the enemy attacks the core, the tail quickly responds, and when the enemy attacks the tail, the core immediately responds. If the attack is on the middle, both the head and tail will respond simultaneously, forming a powerful force.
In trading, one should also lay out positions like this:
Core position: profitable position, proving your judgment is correct;
Core position: breakeven, waiting for further market validation;
Tail position: losing position, which may indicate a judgment error that needs timely adjustment.
How to apply the method of 'unity'?
When the core position faces risks:
Quickly cut losses in underperforming positions and use the funds to lower the cost of core positions, allowing time to verify your investment judgment. Example: Suppose you hold a technology ETF (core position) that is near breakeven, but the market suddenly drops, causing a slight loss; at the same time, you hold energy stocks (tail position) with a significant loss. You decisively cut losses in the energy stocks and use the funds to reduce the cost of the technology ETF, waiting for the market to recover and successfully turn things around.
When the core position is affected by market fluctuations:
Use funds from core or tail positions to add to positions and consolidate profits.
Example: You hold a leading chip stock (core position) that has gained 20%, but the stock price drops briefly: at this time, moderately cut losses in the poorly performing or low-profit pharmaceutical stocks and reinvest the funds into the leading chip stock to consolidate overall advantages. When tail positions continue to perform poorly:
Decisively clean out these failing positions and transfer the funds to the profitable core positions to expand overall profits.
Example: You invested in a new energy vehicle stock, but a policy shift caused continuous declines. You decisively liquidated and used the funds to increase your stake in profitable AI concept stocks, achieving growth in overall portfolio returns.
Trading is not about betting on the rise and fall of individual stocks, but about investing in the performance of the entire portfolio. This layout keeps you in a favorable position, ensuring overall stable profits rather than relying on the luck of a single stock, and the market is the same.
2. "Leverage": A trader's "double-edged sword".
Many people think of 'leverage' as a symbol of greed and risk. However, the rational use of leverage is aimed at saving time and enhancing capital efficiency.
Why do I say this?
Suppose you have 100,000 yuan in your account, earning a stable profit of 10% per year; you can only make 10,000 yuan in a year. If you appropriately use 2x leverage, the return could directly increase to 20%, earning 20,000 yuan a year, shortening the 5-year goal to just 2.5 years.
Real case: Tony's trading journey.
Tony has been trading stocks for many years and initially avoided leverage, resulting in slow capital growth. Later, he studied the rules of leveraged trading seriously and decided to try it reasonably. He set strict risk control strategies, such as:
Use only 1.5 times leverage each time:
Exit the market and take a break immediately if losses reach 3% of the principal:
Reduce leverage immediately if profits exceed 15% of the principal to lock in profits.
After the year, I found that returns had significantly increased, and the target that originally required three years was completed a year early. Li Ming said: "Reasonable use of leverage is to save time in life, allowing us to leave the market and return to real life sooner."
Playing in the crypto world is essentially a contest between retail investors and big players. If you don't have cutting-edge information or first-hand data, you can only be cut! If you want to team up for layouts and harvest the big players together, come find me!! Welcome like-minded individuals.
Let's discuss together -
There is a saying I strongly agree with: the boundary of knowledge determines the boundary of wealth; one can only earn wealth within their knowledge boundary.
Maintain a good mindset while trading; don’t let your blood pressure spike during a big drop, and don’t get carried away during a big rise. Locking in profits is crucial.
For those with limited resources, a grounded approach is an unbreakable way of survival. Good luck!