How to manage risks in the contract market and how to avoid risks #币圈
Everyone can guess, for a professional trader, what percentage of the total account amount does the stop-loss amount for a single trade usually account for? Is it 10%? 5%? Or 1%? The answer is revealed— the stop-loss amount for a professional trader usually only accounts for about 1% of the total account amount. This means that if my account amount is 100 dollars, then the stop-loss amount for one trade is only 1 dollar. The 1% risk management principle is a general standard in the trading industry.
Why do we need to control the loss amount within such a narrow range? In fact, the 1% risk management is mainly based on two considerations: one is the margin of error in capital, and the other is the margin of error in mindset. The so-called margin of error in capital simply means that you will not lose too much trading capital in a short period of time. The margin of error in mindset refers to the fact that the gains and losses on paper do not cause too much impact on the trader's mindset. Imagine, if your stop-loss control is set at 5% of the account amount, and you have bad luck in one day's trading, losing two trades, then you would lose 10% of your capital in one day. This would force you to hastily make up for this loss, leading you to take more aggressive and riskier trades— this is obviously not a healthy mindset for a professional trader. On the other hand, fluctuations within 1% in the account can maintain the stability of the trader's mindset throughout a long trading career.
So what does the risk management process look like in practice? Before placing an order, we will set a stop-loss price based on market conditions. The stop-loss position is generally placed at a key price level that provides support. If this key price is broken, we will no longer hold the position. After setting the stop-loss position, when placing an order, we will calculate the number of lots (position size) needed to be ordered based on the required stop-loss position and the stop-loss amount corresponding to 1%, ensuring that each stop-loss meets the market logic and the 1% risk management principle. #Metaplanet增持比特币 #加密市场反弹