As a practitioner who has grown a principal of 1 million to a scale of 130 million, these ironclad rules learned through blood and fire can reconstruct your trading cognition.
1. Avoid frequent trading with small capital; capture certain opportunities only once a day.
Investors with capital below one million should avoid falling into the trap of betting all their money. Each day, one should only capture one clear trading window, and after executing, leave the market. The friction costs generated from excessive monitoring often consume already thin profits.
2. Positive news realization equals risk; exit when expectations materialize.
When the market is abuzz with "XX platform launch" or "major partnership achieved," those who have not exited by the end of the night must reduce their holdings during the high opening the next day. The ironclad rule of the capital market: all public positive news signals a selling opportunity; most investors' losses stem from the illusion of the sustainability of good news.
3. Light positions before key events; avoid uncertainty.
Events such as Federal Reserve interest rate decisions, inflation data releases, and geopolitical incidents will inevitably trigger severe market volatility. It is advisable to complete position management three trading days in advance, maintaining light or no positions while waiting for trends to clarify before making decisions, refusing to pay risk premiums for uncertainty.
4. Position management is a lifeline; never be fully invested in any cycle.
No matter how optimistic you are about an asset, do not exceed 30% position for initial entry, reserving remaining funds for potential pullback buying. Full positions can lead to passivity in the face of a 20% level retracement, while a reasonable position allocation allows you to retain control during market fluctuations—survival cycle determines profit space.
5. No volatility, no trading; 15-minute K-line determines direction.
The core of short-term trading is to capture price fluctuations, and the 15-minute K-line combination is an important reference indicator. In extreme market conditions, when the J value of the KDJ indicator breaks 100, it enters the overbought zone; when the J value falls below 0, it enters the oversold zone. In sideways fluctuating markets, the returns from holding a cash position often exceed those from frequent trading.
6. Stop-loss must be mechanized; exit unconditionally at a 3% drop.
Establish an ironclad stop-loss mechanism: when the floating loss reaches 3%, immediately execute a closing operation, eliminating the lucky mindset of "waiting for a rebound." Statistics show that holding onto a losing position can amplify losses by 10-20 times; strict stop-loss is the last line of defense for capital safety.